There is no doubt that loans can get you out of financial tight spots. However, they need to be treated responsibly and you should make it a point to pay all the EMIs on time. By doing so, not only will you become debt-free smoothly, but also get to improve your credit score, which can help you get financing in the future as well. Now, generally, no one wants to take a loan and not pay it back, unless their intentions were nefarious from the very beginning!
However, there may be cases where you have taken a loan and had to miss an EMI payment because of reasons beyond your control. So, it is important to know what happens if you miss paying EMIs. And you also need to know how to prevent a situation where you miss an EMI. Just so you know, this is where an online loan EMI calculator can come in super handy. Read on.
How to prevent a situation where you end up missing an EMI:
- Keep your EMI within your budget: When you take a loan, it is very important to know a lot of things, including how much you will be paying as EMI, what is the amount you will be paying as interest per month, and what is the overall interest component that you will pay in the end. All this can be found out by using a loan EMI calculator. If you know your EMI before taking out a loan, you will be able to adjust the amount you borrow and period for which you borrow it.You will be able to plan your repayments in an effective manner too.
- Choose only the best online loan app: Online apps for loan is a rather novel concept that has caught on really fast, powered by the emergence of very powerful smartphones and high-speed mobile internet access. Multiple online loan apps have popped up in recent times, but you need to be very careful and use only the best online loan app. Such apps usually come with extremely strong processes for lending and recovery. They follow set processes that are compliant with RBI and Government of India regulations in all aspects. Thus, your overall loan experience is bound to be very smooth.
- Keep 3 EMIs in safekeeping: This may not seem like the most obvious advice, but once you understand the concept behind it, you will be amazed at how most people miss it despite its simplicity. When you take a loan, for the first three months, set aside double of your EMI amount out of the budget and do this for three months. One part will be obviously used to pay the EMI, while the second part should be in safekeeping. Do this for three months, so that you have 3 months of EMI saved in case of an emergency. As most loans are paid right from a bank account through ECS, you should keep the saved amount in the same bank account to prevent any EMI misses. Plus, 3 months should be enough preparation time to recover from the cause of missed EMIs.
What to do if you still miss an EMI?
- Call the lender and set up repayment options: The first thing to do is to get in touch with the lender to work out a plan to cover the missed EMI. If you choose the best online loan app, they will be able to understand and empathize with the reason why you were unable to pay the installment on time. They will be able to suggest ways to reduce the late fees, or if possible, get them waived off. The company will also be able to set up electronic payment systems to ensure that the EMI payment does not get delayed because of cheque clearing problems etc.
- Explore ways to prevent missed EMIs in the future: One way to handle and prevent further cases of EMI being missed is to work with the lender to see what your options are to revise or restructure the loan in some manner. You can also use a loan EMI calculator to see if your EMI can be reduced by increasing the duration of the loan. However, keep in mind that this may be dependent on a case-to-case basis and such an option may not be available outright from some lenders or in specific cases.
- Be prepared for a hit on your credit score: Your credit score is the measure and indicator of your overall financial health and creditworthiness. How prompt and disciplined you are with your loan EMI payments is the main factor on which your credit score depends. So, if you miss an EMI, the lender will have to report the same to credit bureaus, which will track and provide your credit score to other lenders. So, if you miss an EMI, your credit score will take a hit and you will need to build it back again painstakingly.
All in all, a missed EMI is not a situation you want to be in. However, if you end up in it, do remember the above pointers in mind to salvage the situation effectively and prevent it from happening in the future.
Also Read: Lockdown: Motor Health Insurance EMI’s Deferred
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