Nowadays banks and NBFCs have made it much easier for people to get both secured and unsecured loans at lucrative interest rates. Organizations like Safeloan helps people get installment loans online without a lengthy verification procedure. Safeloan also offers a host of other financial products like short term loans, cash advance loans, pay day loans, bad credit loans etc. They put in their best efforts to ensure that their customers can get the money whenever they need it the most.
While the quick availability of these loans has helped people in solving many of their pressing issues, at times it becomes difficult for many to repay them if the finances do not work out as planned. In such situations people often tend to miss their EMIs or make late payments which in turn adds on to the interest rate and financial burden of the borrower.
Loan defaults can be majorly classified into two categories, which are as follows:
Minor Defaults:
When a borrower is not able to repay the amount within the due date but does pay off eventually within 90 days, it is considered as a minor default. This late payment does have a negative impact on the CIBIL score but the individual can always recover from the damage done by being prompt with the remaining EMIs.
Major Defaults:
When a borrower does not pay the installment for over 90 days, the default is categorized as a major default. In such a scenario, not only is the loan account marked under the Non-Performing Assets Group, the borrower’s CIBIL score is irreversibly damaged.
The consequences of paying off the installment loan late:
Just like any other form of loan, even with installment loans there are consequences for making late payments which are as follows:
Negative impact on the credit score: This is perhaps the most negative consequence of paying off a loan late. When a borrower fails to repay the loan amount on time it reflects negatively on his/her credit score which in turn impacts his/her borrowing capacity in future.
A negative marking in the credit report: Late payment or non-payment of a loan or an EMI is explicitly noted down in the credit report which the lenders can automatically see as soon as another loan application is made. Even if the borrower rectifies the credit score in future, this negative marking will always remain and give lenders a point to think twice before granting another loan.
Interest and late fees: For someone who is unable to make a repayment in time, a late fee or penalty can become an added burden. However, this is exactly what happens when a loan is not paid as per the schedule. The interest charged along with the late fee keeps on increasing the loan amount making it more difficult to repay the sum.
Collection calls: The most disconcerting aspect of failure to pay off a loan in a timely manner is the collection calls that follow. The bank or financial institution offering the loans tries to recover the money lent by making repeated calls to the customer which most people do not appreciate.
Organizations like Safeloan indeed help people meet their financial emergencies by offering installment loans online but they too carry out their bit of credit investigation to ensure that the borrower has the capacity to repay. This makes the whole process quite transparent and fair. You can always contact Safeloan if you are in need of quick cash in order to deal with a financial emergency.
