As much as we try to plan ahead, unexpected situations can arise and sometimes result in us being unable to pay back our personal loans on time. This can be a worrisome situation, but there are steps you can take to manage the situation and get back on track.
Evaluate Your Financial Situation
Before taking any action, it is essential to assess your current financial status. Look at your monthly income, expenses and any other debts you have. This will give you an overview of how much money you have available to manage the personal loan repayments. Having a budget in place can be a crucial tool to ensure that you do not miss any payments in the future.
Contact Your Lender
If you find that you are unable to make personal loan repayments, the first step is to contact your lender. It is important to be honest about your situation and explain why you are unable to make the payments. Your lender may be willing to work with you and offer financial assistance or provide an alternative payment plan. In some cases, they may also offer to reduce or waive late payment fees, which can reduce the overall interest and cost of the loan.
Loan Extensions or Restructure Options
If you cannot pay your personal loan on time, extending or restructuring your loan may be an option. This option is typically available for personal loans that have a fixed term and payment schedule. The lender may offer a loan extension or restructuring option, which can help to extend the repayment period, lower your monthly payments, or change the loan terms to make it more affordable.
Borrowers must keep in mind that while loan extensions or restructuring may provide short-term relief, it can increase the total cost and interest of the loan. So, you must consider this option carefully before going ahead.
Consider Loan Refinancing
Loan refinancing is another option you may want to consider if you cannot pay your personal loan on time. Refinancing involves getting a new loan to repay the existing personal loan. The goal here is to get a lower interest rate or longer repayment period, which can reduce your monthly costs. Borrowers can consider refinancing personal loans with alternative lenders that offer lower interest rates or more flexible repayment options.
A borrower must meet the eligibility requirements set by the new lender to refinance a personal loan successfully. Loan refinancing can reduce your financial burden while providing more flexibility to manage your finances.
Use Loan Payment Apps
For borrowers who struggle to make payments on time due to forgetfulness or the lack of funds, loan payment apps can be of great help. Loan payment appsgive borrowers the flexibility to set up automatic payments or reminders to ensure loan repayments are made on time. With the help of this feature, borrowers can ensure their financial commitments are taken care of without having to worry about missed payments.
Loan payment apps are also a way to apply for personal loans conveniently. Many lenders offer personal loan application options through mobile apps, making it easy and quick for borrowers to apply for loans.
Consider Debt Settlement
Debt settlement is an option that is only available to borrowers who cannot meet their loan payments due to financial hardship. Debt settlement is an agreement between the borrower and the creditor, where a percentage of the outstanding loan is settled, and the remaining debt is forgiven.
Debt settlement can be an effective option for borrowers who have a substantial amount of debt and can’t make their payments on time. In this agreement, the borrower’s credit score may take a hit, and settling on the outstanding debt could also have tax implications, so borrowers must consider the consequences carefully before going ahead.
Here are some of the popular online personal loan apps available in India:
- Bajaj Finserv app: Bajaj Finance is one of the leading digital lenders in India that offers personal loan on app. The Bajaj Finserv mobile app provides instant approval and disbursement of the loan amount directly into your bank account. The app also provides flexibility in terms of loan tenures, repayment options, and more.
- PaySense: PaySense offers personal loans through its mobile app with a simplified application process that takes less than five minutes. Once the loan is approved, the money is disbursed within three to five business days directly into your bank account.
- MoneyTap: MoneyTap is a personal loan app that offers the option of a personal line of credit. Through the app, individuals can withdraw as little as Rs. 3,000 or as much as Rs. 5 lakhs, depending on their creditworthiness.
- KreditBee: KreditBee is another popular online personal loan app that offers quick and easy personal loans up to Rs. 2 lakhs. The app has minimal documentation requirements, and the loan is disbursed directly into the borrower’s bank account.
- EarlySalary: EarlySalary is a mobile app-based lending platform that offers instant personal loans up to Rs. 5 lakhs with flexible repayment options. The app evaluates the borrower’s creditworthiness through their salary account and approves the loan within minutes.
It is essential to understand that in case you can’t repay your personal loan on time, avoiding contact with the lender isn’t the best solution. Loan lenders are more likely to work with you to find an alternative payment plan if you are upfront about your situation. You must weigh all the options available before deciding what works best for your financial situation.
As a borrower, you need to understand that missing a loan payment has consequences. Late payments can damage your credit score, and you may also have to pay additional late payment fees. It’s best to be proactive and reach out to the lender to find a solution to manage your debts effectively. By following the steps outlined above and using the available options, borrowers will be better equipped to manage their finances and make repayments comfortably.