In the current digital era, many individuals turn towards a personal loan when they need extra financial funds for various kinds of reasons. However, it is essential to remember that if you are availing of this facility, you need to meet your Equated Monthly Installments (EMIs) regularly.
But what happens if your loan EMI bounces? Today, we’ll delve into the consequences of missing your EMI payments and explore the steps you can take to mitigate the overall impact. To understand all of this, we first need to understand every single factor related to it.
What are personal loans?
As the term implies, it is basically the money you borrow from us with a set repayment tenure and consistent monthly payments. This loan type is entirely unsecured, meaning you don’t have to risk any of your valuable assets, like a car or a house.
We at Stashfin are the only ones in industry offering such loans at a zero percent interest rate. But keep in mind that it is only for the first month!
What are personal loan emis?
Before we move towards the consequences of bouncing a loan EMI, we first need to understand what EMIs are and how they work.
When you avail of this loan facility, the lender offers you a specific amount of money you must repay over a fixed term. This repayment is divided into smaller, equal monthly payments, commonly referred to as EMIs.
Each of these EMIs comprises two components: the principal amount and the interest. The principal amount is the portion of the amount you borrowed, while the interest is the cost you incur for borrowing.
What Happens If Your Loan EMI Bounces?
When you miss an EMI payment of your personal loan, it is counted as a significant red flag in one’s credit history. It is marked in your credit report and gets amplified as it lowers one’s credit score.
Higher Rate of Interest
The rate of your potential borrowing is determined by your report, which had already deteriorated due to your regular EMI skips. So, even with a good income and a lower debt-to-income ratio in this situation, you’ll be denied a loan in the future.
Delayed Payment Interest Charge
If you, as a borrower, fail to deposit the EMI on schedule, it tends to delay the payment. In such cases, the lender might add the interest due as part of the overall liability.
How to avoid missing a loan EMI?
Form a budget
Establish a monthly budget that outlines all your expenses and income as well. This helps in getting a clear picture of your financial situation and ensures that you allocate funds for your loan EMI.
Use reminder tools
You can easily set calendar reminders to alert you about upcoming EMI due dates. This is quite helpful if you prefer not to automate payments.
Personal loan EMI calculator
Using a Personal loan EMI calculator tool before availing a loan is one of the smartest decisions by potential borrowers. It gives you a clear idea of how much you will be borrowing and what you have to pay back in how much time.
When taking out this loan, only borrow what you truly need and can comfortably pay back. Avoid over-borrowing, as it might lead to difficulties meeting your financial obligations.
We at Stashfin only have one thing in mind: all our potential borrowers face no hassle while availing financial help from our platform. Nobody can question the fact such a loan has emerged as one of the top tools for financial help in tough times.
If you are looking for such a facility, download our application from the Play Store/App Store and attain financial freedom.