Guidelines to Pay EMI’s on Time during a Financial Crisis

One may take up a loan based on his/her needs and this may be due to an emergency or if the time is opportune to fulfill a goal such as purchasing a car. Whatever the reason may be, most of us at a given point of time in our lives will end up availing a loan. While the value they serve is of utmost importance in fulfilling our needs, loans bring with them a huge responsibility and financial commitment. The borrower will have to curtail expenses to make equated monthly installments(EMIs) and there will always be a worry of paying off the next installment.

These equated monthly installments or EMIs are structured around the tenure of the loan and the amount borrowed. Unless there is an intention of fraud, most borrowers have every intention of repaying the loan amount. But in life, emergencies come unannounced and there are certain scenarios that come up which prevent the borrower from making these payments. This could be the loss of employment, medical emergencies or unforeseen expenditures that may arise and prevents an individual from making the monthly payments and if one or more payments are missed, it could lead to serious consequences.

The main impact of missing payments are that it adversely affects the borrower’s credit score. This will make availing future loans very bothersome. The easiest thing to ensure payments of EMI’s and protect the credit score is to borrow the required amount from friends and family members to tie over the next few payments.

If there is a continued difficulty in meeting monthly payments, one should intimate the financial institution the amount was borrowed from. Most banks will try and figure out an alternative solution as they would not want borrowers to default on their loans. They may not alter the total amount but would be willing to lower the installment amount by lengthening the tenure.

During times of a financial crunch, cutting out expenses wherever possible and only making the necessary payments may help tide things over for a while. The small concessions made will add up over time and bring much needed relief.

If there are any other investments made, they should be broken wherever possible if the penalties applied on missed payments far outweigh the returns from that investment.

Difficult situations are very hard to predict but when such situations do occur, one should be calm and collected and follow these steps to ensure they don’t go further into debt. Worry and inaction will only lead to further trouble.