How to Clear Overdue Payments with a Personal Loan?

Loans are an extremely convenient way of meeting requirements and dealing with your financial obligations. According to data provided by the Reserve Bank of India, the percentage of unsecured loan products increased to 74.4 percent in March 2018 as compared to 73.4 percent a year ago. Allowing debts to mount can land your finances in a soup which can take months, sometimes even years to recover. Let’s consider the different options a borrower can consider to get rid of debt and work towards building better financial health. 

Consolidating Payments

Transferring the balance amount to a personal loan can help you avail lower rates of interest rates and a longer time frame in addition to availing a host of other benefits. In case your need is urgent, you can apply for this option at the earliest thanks to the quick online personal loan application process that is available these days.. 

Delay Installments

In case you have missed payments, you will find that your debt increases due to the addition of penalty charges. Since this could affect your credit score, it's better to pay off the loan sooner rather than later. However, in some cases and up to a certain date, delays in making payments will not impact your credit score as long as you have discussed terms with your lender and they have agreed to give you the facility. For instance, many borrowers have availed the RBI Moratorium between Mar - Aug, 2020 in order to deal with financial stress and delay paying EMIs on their loans.

Must Read: How to Clear Credit Card Debt?

This is how a personal loan can help you clear off overdue payments:

1. Debt Consolidation
   A personal loan can help you honour overdue loan payments and get rid of a debt at a faster rate due to its lower rate of interest in some cases. Choose to opt for debt consolidation and obtain a loan of up to Rs. 25 lakhs collateral-free and exit the cycle of debt faster.
2. Attractive rates of interest and flexible tenure
   Avail of personal loan at attractive rates of interest ranging from 13% to 33% and a flexible tenure of up to 60 months.
3. Quicker Disbursal
   Delay in honouring the overdue amount increases the interest to be paid and leads to the building of a mountain of debt. Delaying payments hurts your credit score and can lead to your loan being declined in the future. Taking all these factors into consideration, loan providers have simplified the process from application to disbursal. Prompt transfer of money follows loan approval.
4. Information at your fingertips
   To obtain any information relating to your loan, log into the website of your loan provider and obtain a snapshot or a detailed statement of the information required. 
5. Additional Benefits
   Existing customers are offered benefits over and above what is offered to regular customers.

What is the Eligibility to Obtain a Personal Loan?

Personal loans are collateral loans that can be borrowed for multiple purposes with minimum documentation. Candidates with an excellent repayment history can avail of a loan with a lower rate of interest. The eligibility for applying for a personal loan is as follows:

• The borrower should be employed with a public or private company or should be self-employed with a turnover as per the lenders policies.
• The borrower must be between 21-60 years old.
• The applicant must earn at least Rs. 25,000 in cities like Mumbai and Delhi and Rs. 16,000* in other places all over India.
• The applicant must possess a work experience of minimum 1 year and an experience of 6 months in the present company. Please note that this particular condition varies between lenders, and lenders often change this requirement as per the prevailing market conditions.
• A CIBIL score 705 and above can help in the loan being approved.

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Choosing to apply for a personal loan will impact your future financial health and is not a decision to be taken lightly. Log into the website of the loan provider, calculate your personal loan eligibility first to understand how much loan amount you can apply for. Next, use the personal loan EMI calculator to understand how different interest rates and tenures can impact your EMI, based on which you can estimate your overall monthly obligations. It would also be a good idea to go through the lender’s policies as well as the schedule of fees and charges to understand the other factors required to make an informed decision.