Can't Pay Your Loan EMI? Try These 5 Strategies To Ease The Pressure

If you find yourself struggling to repay a loan, it can be an incredibly stressful situation, particularly when it involves aggressive recovery tactics from agents. Personal loans, which are unsecured and often carry high interest rates, can be particularly challenging to manage. When you miss a loan EMI (Equated Monthly Installment) payment, banks typically impose penalty interest, and recovery agents may begin to harass you. However, it’s important to remember that, according to the Reserve Bank of India (RBI), borrowers have certain rights. Here are five ways to manage loan repayment difficulties and reduce the stress associated with unpaid EMIs .

1. Communicate with the Bank

If you’re unable to pay your EMI due to financial difficulties, the first step is to reach out to the bank or the financial institution from which you borrowed the money. If your loan is from an NBFC (Non-Banking Financial Company) like Bajaj Finserv, Tata Capital, Kreditbee, or Navi Finserv, contact their customer care to explain your situation. It’s advisable to communicate in writing, such as via email, to ensure you have a record of your request for an extension or modification of your repayment schedule.

2. Consider Loan Restructuring

One option to explore is loan restructuring, which involves negotiating with the bank to modify the terms of your loan. This could include lowering the EMI amount by extending the repayment period. While this may result in paying more interest over time, it can provide immediate relief by reducing your monthly financial burden. Banks are often open to this option as it ensures they still receive payments.

3. Request Penalty Waivers

If you’ve missed multiple EMI payments and accrued significant penalty fees, you can request the bank to waive these penalties. If you’re able to secure funds to catch up on missed payments, many banks may agree to remove the penalties, especially if you demonstrate a willingness to repay the loan.

4. Explore a Balance Transfer

Another option is to transfer the balance of your loan to another bank. Some banks offer balance transfer services, where they pay off your existing loan and provide you with a new loan, often at a lower interest rate. This can also help you access additional funds if needed. For instance, if you owe Rs 3 lakh, another bank might offer you a Rs 5 lakh loan, paying off the old loan and transferring the remaining funds to your account. However, be mindful that this could increase your EMI.

5. Negotiate a Loan Settlement

If you’re completely unable to repay the loan, consider negotiating a settlement with the bank. In a settlement, the bank agrees to close the loan account for a portion of the outstanding amount, rather than the full balance. The amount you pay will depend on your negotiation with the bank, and settlements can sometimes be as low as 15% of the remaining loan balance. However, keep in mind that settling a loan can negatively impact your CIBIL score.

Dealing with Harassment from Recovery Agents

If recovery agents are harassing you, it’s important to know your rights. Agents are legally allowed to contact you only between 8 AM and 7 PM, and they cannot threaten or intimidate you. If they do, you should report the behavior to the bank or the police. It’s important to remember that you have legal protection and can take action if you feel harassed.

These strategies can help you navigate the stress of loan repayment issues and provide options to manage your financial situation more effectively.