This will also reflect on your credit history and severely affect your ability to secure loans in the future. As this is an unsecured loan, you will be placed on a loan defaulters list. If there is no resolution, you will have to face the personal loan defaulter's punishment in India. The consequences of a personal loan default As per the RBI guidelines for personal loan defaulters, you can be charged as a criminal if your cheques bounce, as stated under section 138 of the Negotiable Instruments Act of 1881. You must ensure that there is enough balance in the account for the cheque to go through. The lender will then send you a notice stating that your post-dated cheques will be presented to the bank on a particular date. Suppose you ignore the notices and do not approach the lender to look for a solution. However, you need to ensure that this approach is a priority as the next step could severely affect you.Īdditional Read: Managing Personal Loan default Submission of post-dated cheques your reason for defaulting is unavoidable and unfortunate, your lender might even choose to halt your EMIs or reduce the amount temporarily. When your lender initiates this kind of contact, you can approach your lender to solve your problem. Post this the lender may issue a default notice document stating the cashing in of post-dated cheques if there is no response from your end.Īdditional Read: How a co-borrower can increase your personal loan eligibility? Lender opens the door to negotiations Some lenders may have already had an agent call or message you on your registered phone number asking you to make payments. Lenders typically issue a notification after the first or second missed payment. Take a look at what you must watch out for and what can happen if you default on a personal loan.Īdditional Read: Difference Between Repo Rate Vs Reverse Repo Rate The warning signs to watch out for personal loan default Lender issues a notification In such an instance, certain personal loan defaulter consequences can be averted as long as there is a discourse between you and the lender.įurther, recognising when things are going downhill can help you resolve at the right time to avoid damage to your finances and credit score. Regardless of your diligence when it comes to borrowing, financial emergencies tend to show up unannounced and may get the best of you. Thus, you must know the full extent of your actions beforehand. Borrowing a loan is a serious financial obligation.
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