What You Should Do When You Can’t Pay Your EMIs

Arun Sharma August 9, 2019

Most of us have taken loans in the past, or are planning to apply for a loan in order to get out of an emergency situation, or achieve important goals. Today, if you are a creditworthy individual, you can get a loan for nearly any possible reason- such as financing a new home, purchasing a car, covering a medical emergency, paying for marriage expenses, and many other situations.Sometimes, because of unexpected reasons or unplanned expenses, you may not be able to pay your monthly EMI installments on time. If not handled properly, your inability to pay EMI for more than three consecutive months will negatively affect your credit score; furthermore, this will deteriorate your relationship with the lender.If you’re going through a similar situation and struggling to make your EMI payments on time, then follow these steps to take control of the situation:

1. Contact your lender:

If you have defaulted on your loan payment, you’re probably on the receiving end of numerous calls and emails from the lender. Most people’s response is to avoid all contact attempts entirely. However, this is not advisable. Money lenders frequently come across borrowers who default and will take necessary legal actions in order to recover their payment.If you’ve been avoiding your lender’s calls and messages, do not panic. Face the situation once and for all, as scary as it may seem initially. Accumulate all your loan-related documents containing details including loan amount, rate of interest, loan tenure, EMIs, bank notices (if any), and so on. Next, contact your lender and explain to them- with sincerity and genuine reasons- why you were not able to make timely payments. Inform them that you wish to discuss the options available to resolve the issue without affecting your credit score.

2. Reduce EMI

One of the options you can request from your lender is to increase your loan tenure, so as to reduce your monthly EMI amount. While this is an option that can provide temporary relief from financial stress and strain, remember that in the long-term, you’ll end up paying more interest to your lender.

3. Restructure your loan

If all of your previous EMIs were consistently paid on time, then your lender will consider you as a genuine borrower, and you can use this to your advantage. Approach the lender and ask them to restructure your loan by relaxing terms and conditions.You can also consider the option of loan transfer. Do some market analysis and if you come across a bank or NBFC offering better deals with satisfactory terms, then you should consider transferring your loan to another lender.

4. Liquidate your assets

In a dire emergency, one of your last options is to liquidate your assets; but remember, this should always be your last option. If all the other approaches fail, then only you should consider liquidating your assets. Breaking your market investments, fixed deposit schemes, retirement funds, selling your car, etc. will help you gather a large sum of money to pay off the EMI amount or foreclose the loan.

Failing to make a loan payment is not the end of the world. If you run away from your lender, you will only make matters worse and can end up facing extremely serious consequences. Borrowers have all the right to approach their lender and discuss the problem they’re facing in paying off installments on time. If you’re facing a similar situation, do not panic and stay calm. Make an effort to approach your lender and mutually renegotiate the terms and conditions to enable a smooth repayment process.


Arun Sharma

August 9, 2019

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