Today, all your dreams can come true in just a call to the bank and get a loan , be it car loan, house loan, educational loan, Few decades ago, taking a loan was a taboo and people are so conservative that they choose to live life in hunger rather than to take a loan. But now, the scenario has been changed. People take the loan even to fulfill their leisure desires. And find the best way to repay the loan is via EMI payments with less interest rate.
Its natural, that if you take a loan, your cash flows will be affected. Every month a big chunk from your salary will go straight to the bank for EMI. Now the question pops up – what if you are not able to pay the EMI on time or repay the loan? What if there is the consistent failure in paying EMIs? Will you account be blocked and you will be declared as NPA- Non-Performing Asset? Bank will take over the asset on which the loan was taken, forfeit the security?
So in such situations, running away from the lender would be the last thing to do. Banks do pay heed to your problems, considering they are genuine like jobless, accident or any major incident which has affected your cash inflows. In such cases, banks give you several options to repay the loan and walk stress-free. Following are some of the options:
- One-Time Settlement: If your financial condition is really bad, then you can explain yourself to the bank and settle the loan. Bank at times, even waive off some charges when the condition of the borrower is really pissin
- In case of the unsecured loan, Conversion of loan: Banks tend to be stricter as far as unsecured loans are concerned. A borrower can, however, opt for converting an unsecured loan to a secured one by offering a security, which should bring down the rate of interest and thus the EMI burden.
- Defer the payment: There are situation like you have just changed the job and for initial months your pay is less and then there is going to be boom in the salary, so in such cases you can defer you pay for few months and then when the golden days are back with super shine then you can pay the EMI without any load. This way you can relax and pay EMIs later as per the convenience. Bank will charge the penalty for non-payment on the regular dates of EMI payment as decided earlier with the borrower consent.
- Reschedule the debt payment: If bank figured out that paying EMIi is troubling the borrower then the bank can offer you to increase the tenure of the loan and reduce the EMI, which will obviously give you immediate relief but it is not good for long run. Because if the tenure is increased then naturally interest would be paid more. It is suitable if the borrower wants some time. And when the wind turns its direction then you can pay the EMI in the speedier way and repay the loan and can also negotiate with the bank for the interest rates.
If nothing from the above works out then, a bank will go for repossession of the asset for the purpose of recovery of dues after giving you time for repayment. Effects on assets when the bank decides to repossess the asset
1. Movable Asset: Bank will give notice of 7-15 days to make the payment if the borrower fails to do that then after the expiry of the period, the bank will possess the pledged movable asset.
2. Immovable Asset: In this case, Bank will classify borrower as NPA- Non-Performing Asset as per the RBI guidelines and under section 13(2) of SARFASI act.
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