Personal loans are among the high-cost loans, given that their interest rates are usually much higher than other usually taken loans like gold or home or car loan. That’s why, while repaying your high-cost personal loan EMIs, committing any form of irregularity is a must-avoid thing for every borrower, right?
But what if you unexpectedly lose your job? How to manage the 15 lakh personal loan EMI
in such cases?
Explained here are smart ways to manage EMIs and avoid defaulting on the 10 lakh loan, and safeguard your financial health:
Redeem all fixed income investments that are not connected to a crucial goal
Borrowers of personal loans who are having trouble meeting their 15 lakh personal loan EMI
Obligations should first determine whether or not they have any fixed-income investments in the form of recurring deposits, debt funds, or fixed deposits that are not earmarked for any essential financial goals. Generally speaking, the returns that are created by investments in fixed-income securities are lower than the long-term returns that are generated by other asset classes, particularly equity investments. Also, the interest earned from such investments typically has a tendency to be much lower in comparison to the interest rate that is charged on personal loan interest rates and even the lowest-priced loan options that are offered by lenders.
This is because such investments tend to earn a higher rate of return. Therefore, selling your low-yielding fixed-income investments can be a lifesaver in situations where you are having trouble repaying the monthly instalments (EMIs) on a 10 lakh loan. This can help you avoid the potential of defaulting on the loan, which can be quite costly.
Request your current personal loan lender to increase the repayment period
A decrease in the borrower’s monthly income or an increase in an existing loan’s monthly instalment payment (EMI) upon the arrival of the loan reset date can put a strain on a borrower’s finances and make it difficult for the borrower to repay the existing 15 lakh personal loan EMI. In these kinds of circumstances, the borrower has the option of making a request to the lender to extend the loan tenure.
This is because an increased loan tenure would result in a lower amount of personal loan EMI, which, in turn, might make it easier for the borrower to repay the new, lower EMI amount and keep the loan from going into default. Borrowers can try to prepay the loan whenever they have surplus funds in order to lower the overall interest cost. Although extending the loan period would indicate a higher interest payout, borrowers can try to prepay the loan whenever they have surplus cash.
Make use of your emergency savings.
It is essential to establish and continue to maintain a sufficient emergency fund with a balance that is equivalent to at least six times your monthly recurring and mandatory expenses, such as 15 lakh personal loan EMI amount, rent, and SIPs, in order to be able to respond effectively to unexpected financial challenges. The unpredictability of life events such as experiencing a sudden loss of employment or being diagnosed with a serious disease makes the establishment of this fund absolutely necessary. Any such unanticipated financial emergency might have an impact on a borrower’s capacity for repayment, which can ultimately result in the borrower failing to meet recurring EMI obligations.
So, if you have sufficient emergency money, you won’t have to worry about being in a situation like this. When you are faced with a financial emergency that makes it difficult for you to repay loan EMIs, you should consider using the money from your emergency fund to repay the EMIs on your 10 lakh loan. This will help you avoid incurring any late payment fees and protect your credit score from any potential damage that could occur as a result of any form of delayed or missed EMIs.
Switch to another lender through balance transfer
It is a good idea for 15 lakh personal loan EMI repaying borrowers to investigate the possibility of switching to another lender and reducing their debt load by doing a balance transfer to a lower interest rate with the new lender. Before deciding on a specific lender, it is a good idea to compare a number of lenders on a number of different parameters, such as the interest rates on personal loans, the length of the loan, the processing fee, and so on. After that, switch to the lender that offers a lower interest rate as well as better loan service terms. If you did that, it would help lower the monthly payment that you have to make on your 10 lakh loan, and you would then be able to pay the lower monthly payment.
Combine your existing loan obligations
Borrowers, particularly those who are currently servicing numerous loans, frequently tend to get into problems when it comes to repaying the existing EMIs on their personal loans. When there are fluctuations in income or when there are urgent financial needs, Even the duty of timely and regular repayment of several EMIs at varying interest rates and due dates can be a hardship on the borrower at times. Borrowers who fall into this category have the option of consolidating their debts, which would result in them having to return just a single consolidated EMI at a lower interest rate on their 10 lakh loan, as opposed to many EMIs at a variety of interest rates.
Borrowers who already have a home loan and want more money can, for instance, apply for a home loan top-up. Borrowers who do not have a home loan, on the other hand, may want to consider applying for secured credit facilities such as a loan against property or a gold loan if they already own the necessary asset. Whatever the case is, ensure to look for other loan options for debt consolidation, as this will reduce the burden of paying multiple EMIs at different dates and interest rates.