In today’s era, taking a loan has become very common. Where one does not have to face much trouble in getting the loan. At the same time, the difficulty arises when the person is unable to pay the EMI on time.
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In today’s era, taking a loan has become very common. Where one does not have to face much trouble in getting the loan. At the same time, the difficulty arises when the person is unable to pay the EMI on time. After defaulting on the loan, it is common for the person to get a call from the bank, asking him to repay the money as soon as possible. If the reason is valid, then the person is treated well under the rules. As a borrower, you must be well aware of your rights so that you can better deal with any situation of financial stress. Let’s get to know them.
In case of secured loan
If the person wants to keep the asset
The borrower has the right to approach the bank and be heard. Firstly, the individual should contact the loan officer about their exact status and explain why they have not been able to repay the loan, such as job loss, medical emergency, etc.
Keep in mind that this conversation should be through written medium like email. If after the first 30 days, the borrower is still unable to make arrangements to pay the next EMI, then he/she can ask for one more extension. Borrowers can ask banks to defer EMI payment along with the penalty. This can be done for 90 days or three times.
If the person wants to surrender the asset
If the person misses three consecutive monthly EMIs, then the bank will declare the asset as non-performing. After these 90 days, the bank will send notice under SARFAESI Act for 60 more days. After a period of 150 days, the bank will issue a final public notice of at least 30 days, informing the borrower about the sale of the asset. So, the customer will get a total period of 180 days to pay the penalty. Experts say to continue with the EMI and keep the asset with you.
In case of unsecured loan
The borrower can choose the loan restructuring option. They can provide a collateral and convert the unsecured loan into a secured loan. If their past record is good, then the bank can give them a free EMI period of three to six months. According to experts, banks would rather accept anything than nothing. Because they would not want to increase their NPA. However, this step will have a negative impact on the CIBIL score of the person. And he may face difficulty in getting loan in future.