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Apart from sourcing funds, taking a personal loan<\/a> also entails timely EMI payments to a lender. Now, what if you have every intention of paying off your loan on time, but unpredictable circumstances in life cause hindrance in doing so?<\/p>\n\n\n\n Don\u2019t fret! You can keep up with your personal finance repayment<\/a> schedule by following the steps listed below.<\/p>\n\n\n\n Under pressing circumstances that may lead to personal loan default, your first reaction could be that of panic; however, stressing out will only make matters worse. Collect yourself and figure out the reason for missing out on loan repayments.<\/p>\n\n\n\n One must never underestimate the power of communication. So, do not hesitate to talk to your lender, explaining the reason for defaulting on personal loan repayments. Your lender may come up with any one of the following solutions \u2013<\/p>\n\n\n\n Another way out is to opt for loan refinancing. This way, you may be able to reduce your personal loan EMI<\/a>. Refinancing is simply shifting your existing loan to another lending institution provided they offer a lower rate of interest. However, you need to ensure you have a good credit score to be able to refinance your loan amount.<\/p>\n\n\n\n To deal with defaulting on personal finance EMIs, you can consider looking for other income sources; take up short-term jobs such as freelancing projects to help you secure more money. However, if that is ruled out, an alternative would be to look for ways to budget your existing income. Cut back on unnecessary expenses, make use of mega-sales and coupons for purchases, cut down on unnecessary travel, etc.<\/p>\n\n\n\n To pay off your personal credit or loan, you can consider selling some item of value such as a piece of art, jewellery, etc. If that is not possible, there is another way. We often have unused items lying around. This includes anything \u2013 from books to toys. Consider selling them off and using the money towards loan repayment.<\/p>\n\n\n\n Here\u2019s a look at what happens if you default on your personal loan EMI payments:<\/p>\n\n\n\n Also, read – 5 Consequences You May Face If You Are Defaulting on Personal Loan<\/a><\/p>\n\n\n\n Defaulting on a personal loan can significantly impact your CIBIL score<\/a>. When you consistently fail to make payments, lenders report these delays to credit bureaus. This, in turn, lowers your credit score and signals higher credit risk.<\/p>\n\n\n\n A reduced CIBIL score can make it challenging to qualify for future loans or credit cards. Further, if you do get approved, you may face higher interest rates. Continued default may also lead to your loan being marked as a Non-Performing Asset (NPA), further damaging your credit profile.<\/p>\n\n\n\n Rebuilding your score after a default takes time, consistent repayments, and responsible credit behaviour.<\/p>\n\n\n\n Personal loan insurance is a policy that protects your loan payments in situations such as unemployment, disability or death. The policy\u2019s purpose is to help safeguard you against personal loan default in case you\u2019re unable to honour your EMI commitments.<\/p>\n\n\n\n Check whether your personal loan comes with insurance or protection cover<\/a>, as it can significantly ease the burden during financial stress. If your policy is active, it may cover a few EMIs or repay a portion of the outstanding amount, helping you avoid penalties and safeguarding your credit score. Review your loan agreement or contact your lender to understand the coverage details, eligibility criteria, and claim process. Knowing your insurance benefits upfront can give you much-needed breathing room when your finances feel stretched.<\/p>\n\n\n\n You should consider a personal loan settlement<\/a> only when you\u2019re genuinely unable to repay the outstanding amount despite exploring all other options. This step is generally taken in situations such as job loss, medical emergencies, or a sudden income drop that makes regular EMI payments unmanageable.<\/p>\n\n\n\n Loan settlement differs from loan closing because, in this case, the lender accepts a single payment that is less than the total outstanding amount owed. As a result, a settled loan has a negative effect on your credit score and should, hence, always be a last resort.<\/p>\n\n\n\n Before opting for settlement, it\u2019s wise to speak with your lender about restructuring or extending your loan tenure. If repayment is no longer feasible and your financial situation is unlikely to improve soon, discussing a settlement with your lender may help you close the loan with reduced financial stress.<\/p>\n\n\n\n Also, read – What is an EMI Bounce Charge<\/a><\/p>\n\n\n\n Avail personal loan online from Tata Capital \u2013 we offer personal credit or loan at attractive interest rates, flexible repayment terms, and relaxed personal loan eligibility criteria<\/a>.<\/p>\n\n\n\n Not sure of the kind of EMI you will be liable to pay when you avail finance from us? Don\u2019t fret! Simply log on to our website to use a personal loan EMI calculator<\/a> to figure out your potential monthly instalment. To know more, get in touch with us today!<\/p>\n\n\n\n <\/p>\n\n\n\n <\/p>\n\n\n\n#Step 1 \u2013 Stay calm and composed<\/strong><\/h2>\n\n\n\n
#Step 2 \u2013 Talk to your lender<\/strong><\/h2>\n\n\n\n
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#Step 3 \u2013 Consider refinancing the loan<\/strong><\/h2>\n\n\n\n
#Step 4 \u2013 Look for ways to increase income<\/strong><\/h2>\n\n\n\n
#Step 5 \u2013 Sell something of value<\/strong><\/h2>\n\n\n\n
What Happens if You Miss a Personal Loan EMI?<\/strong><\/h2>\n\n\n\n
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How Personal Loan Default Affects Your CIBIL Score<\/strong><\/h2>\n\n\n\n
Check if You Have Personal Loan Insurance<\/strong><\/h2>\n\n\n\n
When Should You Consider Personal Loan Settlement?<\/strong><\/h2>\n\n\n\n
Final thoughts<\/strong><\/h2>\n\n\n\n