Not every individual in this world can afford to pay a huge amount for something at once. This is why these days taking loans from banks and many other financing companies is very common. These personal loans can be taken for various reasons like, loans for higher education, health and care, buying a house or for something so small like going on a vacation.
Though paying back the loan amount can prove to be exhausting task and to keep up with payment of EMI’s or Equated Monthly Installments can be a stressful task. It is very likely that you may miss an installment or several of them in succession. Not paying your loans on time is certainly worrying some and is not something which you can ignore so easily and not care about it but at the same time it also does not make you a criminal.
Meaning of paid default
Loan default happens when a person who has taken a loan fails to repay an installment which was meant to be paid in accordance with the agreement with your lender. It will damage your credit score and you will face several collection processes. These days, in almost all the cases, there is a certain period of delinquency within which the borrower is not penalized for the missed installment. People using personal loan with paid default start worrying of what the consequences might be of missing out on such repayment of loans.
To help you out in explaining some of the rights which help in protecting the interest of loan defaulters here are some tips to remember if you’re using personal loan with paid default:
- Extension in repayment of your loan: There can be many reasons due to which you can miss out on the repayment of your loan like financial crisis because of job loss or some tragedy like theft can happen. On a human level even your bank will understand your situation, so don’t hesitate to share your situation with your lender. The bank on its part, after analyzing how your financial condition is, can help you out by extending the period of repayment of your loan. This will lower down the EMI value, even though the interest will add more to your loan, but it will provide you certain amount of relief if you’re using personal loan with paid default.
- Relaxation in payment for sometime: There can be a situation when you are about to start a new business and all your savings has been put into it because of which you cannot pay some installments and fall in to the category of a borrower using personal loan with paid default. But as soon as your business flourishes and goes in its full flow you will be able to start paying back your loan.
- Securing loans with assets: If you are on an unsecured loan, your lender might become more strict if you fall in the category of people using personal loan with paid default. The best way to please your lender is to secure your loan with some asset. This will not only benefit you to extend the period of your loan but will also lower the interest rate.
If you are using personal loan with paid default don’t try to shy away from your lender about the situation you are in. If any of the above mentioned information works out in your favour, try and maintain your reputation by being punctual in paying you loans after all the resettlement.
However, if you can, it is better not to be in debt at all. Being debt free gives you inner peace and makes available to you some additional funds to make investments using the monies you would have used to service the interest on debts. If you are finding it difficult to get out of debt, see 11 sure-fire ways you can get out of debt faster even if you have a low income.
About The Writer : This is a guest post written by Jack Louis, a professional content creator. He loves to write about ways to enhance daily life experiences.
NB: This article was edited for content, quality and audience.
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