Compared to more common loans like housing and vehicle loans, personal loans tend to be somewhat expensive. That is why it is advisable that every borrower should avoid doing anything odd while making payments on a high-interest loan like a personal loan.
But in ongoing economic downturns and uncertainties, layoffs/jobcuts have become a commo news we get to hear almost everyday, and that too on a large scale, right?
From Meta, Microsoft, Intel, Snap, Ford, Byju’s, to Switzerland’s second largest bank Credit Suisse, big and small companies around the world are announcing these difficult decisions.
So what if you suddenly find yourself unemployed? If this happens to you, how do you handle the 5 lakh personal loan EMI or other loan you may have at the moment?
Worried? Let us help with these tips for keeping up with your monthly EMI payments so that you don’t fall behind on your navi personal loan and risk jeopardising your financial stability in case you got laid off from your company amid recession fears:
Withdraw from fixed-income investments unless they directly contribute to an essential objective
If a borrower of a personal loan is having problems keeping up with their 5 lakh personal loan
emi, they should first look into their other fixed-income investments, such as recurring deposits, FDs, debt funds, to see if they may tap into any of those. In comparison to other asset classes, especially equities, fixed-income instruments tend to produce lower returns over the long run for investors. Furthermore, the interest received from such investments tends to be significantly lower compared to the interest rate that is imposed on personal loan rate of interest and also the cheapest loan alternatives that are offered by lenders.
This is because returns on such investments are typically higher. If you’re having problems making the EMI payments on a ten thousand rupee loan, selling your relatively lower-yielding investments could be a lifesaver. Avoiding the possibility of defaulting on the loan can save you money.
If you need more time to pay off your current personal loan, talk to your lender about extending the term
When the reset date for a loan comes around, it might be tough for a borrower to continue making payments on a 5 lakh personal loan emi, especially if their monthly income has decreased or if their EMI on another loan has increased. A borrower is within their rights to ask for a loan extension under certain conditions.
The reason for this is that if the loan term is extended, the monthly payment on the personal loan will be reduced, which may make it simpler for the borrower to avoid default. Prepayment of a loan is one way for a borrower to reduce their interest payments. Although increasing interest payments by extending the loan time is an option, borrowers are encouraged to make prepayments whenever possible.
Utilize the funds set aside for unexpected expenses
Establishing and maintaining an emergency fund with a balance of at least six times your monthly recurring and obligatory costs like navi personal loan emi amount, rent, and SIPs is crucial for efficiently responding to unanticipated financial crises. This fund is essential because of the unpredictability of life events like losing one’s job or being diagnosed with a catastrophic illness. A borrower’s ability to repay a loan may be negatively impacted by an unexpected financial emergency, increasing the risk that the borrower would fall behind on their required minimum instalment payments (EMIs).
If you’ve set aside some money for unexpected expenses, you won’t have to worry about being in this predicament. If you have an emergency that prevents you from making your loan payments, such as losing your job or experiencing a medical issue, you may want to use the money in your emergency fund to make your EMI payments on your 5 lakh personal loan
. Doing so will help you avoid the fines associated with making a payment late and will also help you avoid any damage to your credit score that might arise from not paying your EMIs on time.
Balance transfers allow you to switch to a different lender
Borrowers who are currently making payments on a navi personal loan Emi should look into moving to a new lender in order to consolidate their debts and save money through a balance transfer to a cheaper interest rate. You should shop around for the best personal loan interest rate, loan term length, processing charge, and other terms from multiple lenders before settling on one. After that, you should make the transition to the lender who provides the best interest rate and terms for servicing the loan. If you did that, you could reduce your monthly payment on your loan and still be able to afford the loan.
Bring together your current loan commitments
Navi personal loan borrowers, especially those who are servicing multiple loans, frequently run into trouble when it comes to making their EMI payments on time. When there are swings in income or pressing bills to pay, However, it may be difficult for the borrower to meet the obligation of timely and regular repayment of many EMIs with various interest rates and due dates. The option of debt consolidation exists for borrowers in this situation, which would allow them to pay back their Rs 5 lakh personal loan in a single EMI at a reduced interest rate, as opposed to several EMIs at varying rates.
For example, a house loan top-up is available to borrowers who already have a mortgage but would like additional funding. In contrast, those who haven’t yet secured a mortgage may benefit from applying for secured credit facilities like loans against property or gold. In any event, it’s a good idea to investigate alternative loan choices for debt consolidation, as doing so would lighten the load of having to make multiple EMI payments on varying schedules and at varying interest rates.