Any irregularities in your personal loan’s EMI payments could result in additional expenses for both you and the lender. Lender may impose the necessary fines for late EMI payments in addition to potentially lowering your credit score.When EMI payments are not made on time, a loan default also occurs in the worst case scenario.
Given that a sizable percentage of people frequently encounter comparable difficulties with EMI repayment, it’s imperative to be aware of your options in order to avoid defaulting on a ICICI bank personal loan. You can manage your EMIs, avoid personal loan default, protect your ICICI personal loan eligibility, and keep your financial stability by following the advice below:
Any fixed income investments that aren’t meant to aid you in achieving significant financial objectives ought to be redeemed.
Finding fixed-income investments in recurring deposits, debt funds, or fixed deposits that are not designated for any significant financial goals is one of the first and most important steps personal loan borrowers can take when having trouble repaying their EMIs. The long-term returns on these fixed-income investments are typically lower than those of other asset classes, particularly equities. Even the lowest personal loan interest rates that lenders might offer are frequently much lower than the interest on these kinds of investments. Redeeming your low-yielding fixed-income investments can help you keep up with your personal loan payments and avoid default if you are having trouble making your EMI payments, which will help preserve your ICICI personal loan eligibility for near future.
Request a tenure extension from the business that issued your current personal loan
Due to factors like rising lending rates, such as personal loan interest rates, as well as changes in monthly income or rising EMIs on existing loans, borrowers frequently experience financial stress as a loan reset date draws near. It might be simpler for the borrower to make the lower EMI payment and prevent a potential loan default if the ICICI bank personal loan term were extended. An elongated personal loan tenure would result in a smaller personal loan EMI. The borrower may ask the lender to extend the loan’s term in light of these circumstances. Even though doing so would result in a higher interest payment if the loan’s term were extended, borrowers can attempt to prepay the loan whenever they have additional funds to do so in order to lower the overall interest expense.
Use your emergency savings to pay the EMI.
For handling monetary emergencies, it is crucial to establish and maintain an adequate emergency fund that is at least six times your monthly recurring and obligatory expenses, such as rent, SIPs, and loan EMIs. This fund is crucial due to the unpredictability of life events like a sudden job loss or serious illness. Any such unforeseen financial emergency may have an impact on a borrower’s ability to make payments, which may result in the failure of ongoing EMIs as well. Undoubtedly, having a sizable emergency fund would shield you from such occurrences. Consider using your emergency fund to pay off the EMIs on your personal loan whenever you are having trouble making ICICI bank personal loan payments due to a financial emergency. You can reduce the possibility that missed or delayed payments will result in late fees and harm to your credit score by doing this, besides preventing your ICICI personal loan eligibility from going down.
Change lenders to get your personal loans at a lower interest rate.
Personal borrowers should investigate the possibility of a balance transfer to a different lender if they are having trouble making their current loan’s EMI payments. It is a good idea to compare lenders before selecting one based on a range of factors, such as processing fees, loan terms, and personal loan interest rates. The best option is the lender with the lowest interest rate and the loosest loan servicing requirements. By doing this, you would be able to pay the lower EMIs and help to lower the amount of your personal loan payments. You should be aware that the new lender may charge you a processing fee if you ask them to transfer your balance because they might treat your request as if it were a completely new loan application. Always make sure a balance transfer won’t result in you paying overall higher interest rates and that the disadvantages won’t ultimately outweigh the benefits before making the switch.
Decide whether to consolidate your loans.
Many borrowers, especially those with numerous loans that are still in default, struggle to make their monthly personal loan payments. When income is interrupted or money is scarce, even the financial strain of timely and consistently repaying a number of EMIs with different interest rates and due dates can occasionally be too much for the borrower. Instead of making numerous payments for personal loans with different interest rates, these borrowers can choose debt consolidation, which only requires them to make a single consolidated EMI payment.
For instance, borrowers who already have a home loan can choose a home loan top-up because the interest rates are typically lower than those of other loan options, like personal loans. The borrower can avoid having to make pricey monthly loan payments on multiple loans by using money from the top-up loan to pay off other debt.
While borrowers of non-home loans who are having trouble repaying high-cost loans like personal or business loans may want to think about using secured credit options like loans against gold or real estate if they have the necessary asset.Usually, these loans have lower interest rates. The loan proceeds from these borrowing options may be used to pay off the entire outstanding balance of the current high interest loans.Not to mention that personal loans like ICICI bank personal loan frequently serve as a bridge to assist us in achieving different financial objectives or bridging financial gaps in our daily lives. Many people are now required to simultaneously service multiple loans at once, including personal loans, mortgages, auto loans, and so forth, at either the same or different points in their working years, as a result of the gradual expansion of loan options. The above guidance must be understood and followed in order to effectively manage EMI repayments because personal loans are frequently unsecured and frequently have higher interest rates than other types of loans.