When you take a loan from the bank for your personal needs, you also get an EMI facility. This is where the lender and borrower agree on a certain number of monthly installments that need to be paid back to repay the loan. The EMIs are usually taken out automatically from your salary or income, making it easier for borrowers who do not have enough money every month. However, many people either forget about their EMIs or don’t want to pay them because they can’t afford them (even with other loans). So let’s find out why is it important to pay your EMIs on time.
If you don’t pay your EMIs on time, your credit score is at risk.
This is because missed or late payments will be reflected on your credit report. A low credit score could make it difficult for you to get a loan in the future. In addition, you may have to pay a higher interest rate if you do get approved for a loan. So, it’s essential always to pay your EMIs on time to maintain a good credit score.
This is because your credit history will reflect missed or late payments. Therefore, a low credit score could make it difficult for you to get a loan in the future. In addition, you may have to pay a higher interest rate if you do get approved for a loan. So, it’s essential always to pay your EMIs on time to maintain good credit history and avoid unnecessary problems with lenders down the line.
A lousy payment record puts many aspects of our lives at risk – from getting loans/credit cards when we need them most (for instance, paying fees while going through school), even renting an apartment becomes challenging without a strong enough financial background & finally being denied entry when traveling to another country. All these problems could be easily prevented by paying your EMI on time.
How is EMI calculated?
There are two ways to calculate EMI: the flat-rate method and the reducing-balance (or reduce-balance) method. Both take into account the loan principal, the loan interest rate, and the loan term in their calculations.
Debt consolidation loans are a type of personal loan that can be used to pay off other high-interest debts. The interest rate on a debt consolidation loan is usually lower than the rates on the individual loans you’re consolidating, so it can save you money in the long run.
You may be charged late payment fees and interest rates.
The worst-hit will be people who don’t pay their credit card dues. Remember that a credit card is an unsecured loan. A home loan has the home itself as the collateral, and the car loan has the car as something the bank can claim if you default.
A credit card is a loan for about 50 days without any object that the bank can claim. For such an unsecured personal loan, banks charge a high-interest rate—between 24% and 40% a year.
Your loan eligibility may be reduced.
When you take a loan, it is essential to remember that you have to repay it in time. Failing to do so can result in several consequences, some of which are listed below:
When you don’t make your payments on time, your lender will be charged late payment fees. In addition, your interest rate will also increase, leading to an increase in the overall cost of your loan.
One of the ways lenders determine a borrower’s eligibility for a loan is by checking their credit score. When you have a history of late payments, your credit score will be reduced, making it harder for you to get a loan in the future.
Bad credit history can haunt you for years. It can make it difficult to get loans, rent apartments, and even get jobs.
Therefore, it is essential always to make your payments on time and avoid any unnecessary penalties. If you are struggling to make your payments, speak to your lender and see if there is any way they can help you. Alternative repayment plans may be available to make repaying your loan easier. Don’t hesitate to ask for help!
It’s important to stay disciplined with your finances and make all payments on time.
If you make all your loan repayments on time and stay in good standing, it’s an excellent way to build a positive credit history. This can be instrumental in future loans or even renting apartments!
If you know that things might get tough financially but want to avoid missing out on any EMIs, speak with your bank about alternative repayment plans such as EMI holiday schemes. They won’t charge interest for several months until the next payment date.
Avoid late fees by making sure that you always pay well before the due dates! Again, these may seem like just numbers, but failing to do so could lead to more significant problems down the line! But, again, it’s much better to be safe than sorry!
Avoid paying late fees by making sure that you always pay well before your due date. Again, these may seem like just numbers, but failing to do so could lead to more significant problems down the line! But, again, it’s much better to be safe than sorry!
Don’t forget about alternative repayment plans – if things get rough financially. There are sometimes other options available such as EMI holiday schemes where lenders don’t charge interest for several months until the next payment date. Don’t hesitate to ask for help if needed either!
The lender may sue you if you fail to make payments for an extended period.
The lender can also file a police report, negatively impacting your credit score. You may be blacklisted by the lending institution, making it difficult to obtain another loan in the future.
Paying your EMIs on time is crucial because it shows that you are reliable and responsible with your finances. It also helps maintain a good credit score, which is essential for obtaining loans and other types of financing in the future. On the other hand, failing to make payments can have serious consequences, so it’s always best to stay ahead of your obligations.
If you’re having trouble making ends meet, talk to your lender about a payment plan that works for you.
Personal loan interest rates are typically very high, which means that you should be proactive about making your payments on time. In addition, outstanding loan EMI payments are significant financial commitments, so never hesitate to talk to your lender with a plan that works for both of you.
A financial advisor can help you understand your budget and formulate a payment plan. If you miss or delay any EMI, you will be charged a late fee as well as penal interest. In the worst-case scenario, the bank may seize or take over your asset in case of collateralized loans such as home loans, car loans, or loans against property.
In conclusion
It is essential to pay your EMIs on time to help you maintain a good credit score. A high credit score can help you get approved for a loan or mortgage at a lower interest rate. It can also help you get approved for other types of credit, such as a credit card or car loan.
If you are struggling to make your monthly payments, reach out to your lender and see if you can work out a payment plan. Please do not ignore your debt because it will only worsen over time.
