Why Prioritise Your EMI?

When Applying for a Loan, it’s common for customers to focus on the interest rate and other charges. However, it’s equally important to consider the monthly installment. A manageable Equated Monthly Installment (EMI) is not just a financial obligation but a tool that allows you to repay the amount without straining your monthly budget, providing a sense of financial security and peace of mind.

How Does the EMI work?

Understanding how the EMI works is critical to effective loan planning. The interest rate applied to the loan amount issued to the customer is divided over the tenure for which the loan is sanctioned. Each EMI (Equated Monthly Installment) includes a part of the principal and the interest charged. For both mortgage and unsecured loans, the interest is charged on a monthly reducing basis. This means that with the payment of each installment, the amount of principal owed reduces, and the interest is applied to the reduced balance. Despite the changing ratio of principal and interest, the EMI remains constant for the entire tenure, making it easier to plan your monthly budget.

Benefits of an EMI Calculator

Before taking out a loan, using an EMI Calculator can be a game-changer. It allows you to determine the monthly installment in a flexible and adaptable way. You can adjust various parameters, such as the loan amount, interest rate, and repayment tenure, to find the most suitable installment. If the Calculated EMI seems too high, you have the power to consider extending the repayment term, applying for a lower loan amount, finding a lender with a lower interest rate, or opting for a shorter repayment term with higher EMIs. This tool provides a sense of reassurance and confidence in your loan planning, putting you in the driver’s seat of your financial decisions.

Using an EMI Calculator can help prospective borrowers determine a suitable EMI that fits their monthly budget, thus saving valuable time and effort during the loan application process. This efficiency in financial planning allows the borrower to focus on other essential aspects of their life, making them feel more productive and in control of their time.

What are the Advantages of an EMI?

The EMI has become part of daily existence, a tool that has helped millennia better manage life and emergencies. Salaried persons can dream of owning their home and going on a vacation by appending a home or Personal Loan and making the repayment via EMI. Financial shortfalls during emergencies can be met with a Personal loan. Banks such as HDFC Bank, ICICI Bank, and Axis Bank now disburse Personal Loans Online, and repayment is done with easy EMI over 12 to 72 months.

Self-employed individuals can Apply for a Business Loan to extend their existing work and upgrade their machinery. Financial shortfalls during weddings and family functions are conveniently met, and funds are repaid over monthly instalments or EMI.

Loans from Banks and NBFC fuel the Auto industry, and most individuals find it convenient to have their transport. With a minimal down payment, the cost of the vehicle is paid in monthly instalments for personal or commercial usage. Vehicles are movable commodities, so banks can recover them if the EMI is not paid.

Banks and financial institutions are prepared to provide funds and generate income from repayable loans, benefiting both the borrower and the lender.

The Advantages of an EMI are Immense, But Let us Consider a Few Cons.

“When borrowing, it’s essential to clarify and understand the terms of the repayment schedule. Make sure that the payment of the EMI or the monthly installment comfortably fits your budget, as any delay or non-payment will negatively impact your credit ratings.

Keeping track of the EMI Payment dates and maintaining a sufficient balance is obligatory, as a bounce will negatively impact your record.

Accumulating many EMIs without proper budgeting can lead to a debt trap. Borrowing excessively for extravagant spending without considering your budget may also lead to financial difficulties. It’s essential to be mindful of this because banks and financial institutions are unlikely to lend to individuals who are overleveraged and paying too much towards their EMIs.

Repaying credit via instalments makes fulfilling obligations and comfortable living affordable, but this should not be taken for granted. The commodity is not yours until you have paid the amount due as an EMI or through a downpayment.

Know Your EMI

After the loan request is approved, an agreement is initiated between the borrower and the lending organisation, which mentions the terms and conditions of the loan. These include:

• The interest rate.
• Processing fees.
• Insurance amount if required.
• The tenure for the loan.
• The monthly instalment. (EMI)

A loan repayment schedule is issued, giving details of each instalment and the component of the interest and principal deducted over the tenure of the loan.

The EMI amount for a Personal Loan is fixed at the time of disbursal and is deducted from the applicant’s account monthly. A floating interest rate is applicable for a mortgage loan, adjusted according to the PLR (Prime lending rate) declared by the RBI (Reserve Bank of India).

The customer’s prerogative is to maintain sufficient funds in the account to clear the EMI for all credit taken. A bounce or return will negate the Credit Score and the track record, whereas an on-time payment record for your EMI will go a long way in getting you additional credit when required with the best terms!

The post Understanding Equated Monthly Installments (EMI) and Their Impact on Financial Planning first appeared on Yourloanadvisors.

What is the Method of Payment for an EMI?

In previous years, lenders conducted all banking transactions via cheques or drafts.

A customer had to give advance cheques for each instalment for example, for a Home loan approved for 20 years, the customer submitted 240 post-dated cheques, which was extremely tedious and time-consuming. The introduction of CTS (cheque truncation system) by the RBI (Reserve Bank of India) provided much relief and considerably reduced the number of cheques required.

These methods are now redundant with the development of NACH (National Automated Clearing House), which allows the automated transfer of funds within Banks for recurring payments and ECS (Electronic Clearing services), which authorises electronic transactions of funds.

A customer has to sign the ECS or NACH Mandate form, which specifies the applicant’s bank details and permits the Lender to debit the account the Bank subsequently presents the EMI for clearing to the customer’s Bank account on a fixed date.

What are the Reasons for an EMI Bounce or Return?

The Bank presents an EMI for Repayment of a loan, mortgage or consumer product on a fixed date every month. The primary reason for which an EMI Returns unpaid is due to insufficient funds in the customer’s account. The borrower should maintain enough balance in the salary account before the EMI Due date in case the salary is not credited in time to pay for the EMI. If insufficient funds are in the Bank account, the EMI will return unpaid, and the Bank records this transaction as a bounce.

There are other causes, too, such as incorrect customer details captured in the mandate or the customer shifting the account to another Bank. In that case, the customer’s prerogative is to inform the Bank or make the required changes in advance. The EMI, if returned unpaid, is recorded as a bounce.

What are the Effects of an EMI Bounce in the Bank Statement?

Your Bank statement details portray your financial health and management skills. The bounce of an EMI shows in your Bank statement for times to come, which hurts your credit prospects. No Financer will issue a credit to an individual with a cheque return or an EMI Bounce in the past three months. Further, it is a good idea not to apply for a Loan or a Credit Card with a discrepancy in the Bank statement, as a CIBIL inquiry will negate your score. As a precaution, always keep an EMI amount in your account in advance to maintain an on-time repayment record.

What Happens if an EMI Returns Unpaid?

The return of an EMI is undesirable, but if it does happen, there are consequences the immediate effect is an ECS bounce charge, applicable as per the policy of the Bank. Listed below are the ECS return charges of Leading Banks.

Charges Per Return.

HDFC BANK ₹ 350/- to ₹750/-

ICICI BANK ₹ 350/- to ₹750/-

AXIS BANK ₹ 500/-

SBI ₹ 295/-

The charges are applicable each time the EMI returns unpaid: A Bank may try to deduct the EMI multiple times or as specified in the Loan agreement. Though there are instances when customers have had to pay inflated charges due to the Financers attempting the EMI many times, the rule states that if the EMI does not clear on the first or second attempt, the Financer will have to take permission from the customer to represent. The customer may deactivate the ECS or NACH mandate as a last resort.

In addition, the Financer levies a Penalty interest of 2 to 3 % on the overdue amount for the number of days the EMI remains unpaid.

If the Emi remains unpaid for 90 days, the Lender classifies the loan as a non-performing asset.

What is the Effect of a Bounce on the CIBIL Record?

Hail or storm, the Financer presents the EMI through the ECS mandate on the designated date: respect the date and ensure sufficient funds are in the account for payment. Once done, the Bank cannot reverse the transaction even if there has been an oversight and the customer pays the instalment on the same day.

It’s not a good idea to take the payment of your EMI lightly, as the delayed payment will figure constantly in the CIBIL record. The answer is to make the payment immediately as the Bank reports the delayed Emi payment to the CIBIL.

The CIBIL account reflects the existing status of all credit taken and the payment tracks. A random EMI bounce can occur due to unavoidable circumstances, but a continuous delay or non-payment downgrades the CIBIL Score.

The Lender will send reminders and try to reach the customer to get the payments. If the applicant fails to pay the instalment within 90 days of the due date, the next step is to report the account as a write-off to the Credit rating agencies. With a loan written off or excess bounces of EMI showing in the CIBIL, the score will sink, making it difficult for the applicant to get additional credit when required.

The Bank will refer the case to recovery agents who will further contact the customer to recover the loan paying back the complete loan amount with interest will serve well, as a settled loan remark will permanently mar the CIBIL history of the client.

A Personal Loan and a Credit Card are unsecured credit; therefore, delays in payment of the EMI will affect the Credit score. With a mortgage or a secure loan, the Financer has a guarantee and can recover the amount if the client cannot pay. Therefore, the credit ratings show a little flexibility and a delayed EMI or two does not impact the credit score if the customer pays future EMI on time. However, excess EMI returns cannot be overridden even if the applicant is employed with a Top A or B Category Company.

Sometimes, an oversight can cost a lot for example, Rohit Kumar changed his job but should have paid more attention to transferring his EMI mandate to his changed bank account. When he remembered to transfer funds, his EMI had already bounced; this happened a few times in a row. Though he transferred funds and paid the amount due, noting the delay, the Bank sanctioned him a higher interest rate the next time he Applied for a Personal Loan.

Credit is readily available for individuals who manage their finances well, and Lenders look to fund customers with a good repayment record. Before taking credit, calculate your outgoings and take as much credit as you can afford to repay use our EMI Calculator to check your instalment amount.

Being vigilant about the EMI and consuming as much credit as one can manage is the answer to a timely repayment record.

The post What is an EMI (Equated Monthly Installment) ? first appeared on Yourloanadvisors.

This guide will explore effective tactics and alternatives to Reduce Your Bank Loan EMI, whether you’re repaying a loan or considering a new one. Implementing these tactics can improve financial management. Techniques to Reduce EMI:

Let us start by looking at Ravi’s case. Having taken a Personal Loan from Axis Bank, he now feels burdened by the EMI payments. Thus, he seeks to reduce the EMI amount and explores the following methods to achieve this goal.

Partial Repayment of the Loan.

If you have an existing Personal Loan and are struggling with the EMIs, you may want to consider the option of part prepayment. Many lenders offer this facility once a certain number of EMIs, usually 12, have been paid. Prepayment involves paying a substantial sum from the outstanding principal amount. For instance, leading banks such as HDFC Bank allow borrowers to prepay up to 25% of the loan amount in a calendar year.

By doing so, the outstanding principal amount gets reduced, along with the accrued interest, resulting in lower EMIs. You can use funds from your annual bonuses or variable pay to significantly dent your loan balances. Opting for part prepayment lowers your EMIs and reduces the loan tenure, helping you become debt-free faster. This is a strategic approach to managing your loan and lightening your financial burden.

Consider a Personal Loan Balance Transfer

Opting for a Balance Transfer of your loan entails transferring the outstanding amount of your current Personal Loan from one bank to another. The primary motive for this transition is to take advantage of a lower interest rate offered by the new Bank on the remaining loan amount. By leveraging this facility, you can reduce your debt burden and save on interest payments. HDFC Bank offers to take the principal balance of multiple loans under a single umbrella the customer can pay a single EMI at a reduced interest rate.

Take into consideration the variance in interest rates and any extra fees linked to the transfer to confirm that this alternative aligns with your financial aims and objectives.

Apply Personal Loan Top-Up

If you are already repaying a personal loan and have been diligent with your EMIs, you may qualify for a beneficial option a Top-Up Loan. This is one of the best ways to reduce your loan EMI. This additional loan allows you to access more funds while potentially benefiting from lower interest rates. Furthermore, opting for a Top-Up Loan may also offer the advantage of extended repayment tenure. This extension could lead to lower EMIs, sometimes providing increased financial flexibility.

Now, let’s consider the situation of Ramesh, who requires a Personal Loan, but his priority is low EMI. Consequently, he approached his bank to discuss this requirement. The bank presented him with several options to consider. Here are a few of them:

Opting for a Higher Down Payment with a Mortgage

If you are hassled with numerous EMI and credit card bills but require additional funds, applying for a mortgage is a good option. With a Loan Against Property or a Home Loan, the interest rate applied is the most reasonable and large loan amounts can be appended to settle other dues. If you already have a mortgage, apply for a top-up to repay minor loans.

The interest rate for a secure loan is lower than unsecured credit, and the EMI can easily fit the budget with an extended tenure of 240 months. Pre-closure and partial payment are allowed without any restrictions and charges. The downside is that the interest is charged at an annual rate, so the total costs of a mortgage over the years are more than an unsecured Personal Loan.

A Loan with An Extended Repayment Period

Opting for a longer repayment tenure for a loan can significantly impact your monthly instalments. With a longer loan term, the total amount due is spread out over a more extended period, resulting in lower monthly payments. You can analyse and understand this by using an Online Loan EMI Calculator. This facility can benefit borrowers who require more flexibility in their budget.

In Conclusion

An EMI is a mandatory part of the monthly budget, and enough funds should be maintained in the account to clear the same. Delayed payment of the EMI is not an option it will lead to further debt issues and downgrade your CIBIL Score.

Getting credit is easy, but do not overextend yourself the repayment is a responsibility and should not strain finances.

If you need further advice, Contact www.yourloanadvisors.com to help you confidently work towards your financial goals.

The post How to Reduce Your Personal Loan EMI first appeared on Yourloanadvisors.

When you Apply for a Personal Loan, you won’t need to provide any security or collateral to the Bank. Thus, the Bank sanctions the Loan amount accordingly to ensure the applicant can repay the EMI comfortably. The customer can apply for the amount needed, but the Bank decides the eligibility for the Loan and the EMI to pay.

How is The EMI Calculated?

The FOIR, or fixed obligations and income ratio, is widely used by leading Banks such as:

• HDFC Bank
• ICICI Bank
• Axis Bank
• YES Bank

To calculate the Personal Loan EMI, the Lender calculates the FOIR by considering the Fixed Obligations of the applicant, which include the monthly household expenses, including rent paid.

The FOIR applied varies from 30% to 70%, a ratio of the monthly salary, excluding the statutory deductions, is included in the monthly fixed obligations, and the balance is the disposable income. A customer can use this surplus for lifestyle expenses and repay instalments for credit taken.

The FOIR applied varies with the customer’s profile: several factors influence the issuance of the Loan amount and the applicable EMI. If the credit usage is in excess and exceeds the FOIR, the Bank may not issue the required Loan amount.

Though individual Banks have their parameters and policies, the primary ones that affect Personal Loan Eligibility and the EMI include the following:

Income: A salaried individual can plan and budget expenses with a fixed monthly payment. After setting aside the necessary funds for rent, food, school fees, fuel, and other essential costs, allocate the remaining amount towards travel, entertainment, or the EMI for credit.

Individuals who earn a higher salary have more money left over after covering their household expenses. As a result, they can allocate a more significant portion of their income towards paying off an EMI.

Therefore, higher-income applicants with a salary above ₹75k are given higher loan amounts as a Personal Loan and are eligible for a higher ratio of the wage and a lower FOIR to pay as an EMI. Applicants with an of ₹ 50k and below are applied a FOIR of 50% or less.

Company Category: All job seekers aim to work with a well-reputed and profitable company that assures employees a steady income and a promising future.

Banks, too, update a list comprising of the Economic Times’ Top listed companies, emerging corporates, Government entities and prominent PSU organisations. The Bank grades the company according to the turnover, profit and prospects.

Banks will allow an employee of a company listed as a Category A concern to pay a higher share of the salary as an EMI than a Category C company employee.

For example, Mr Kumar, working with a Category A-listed firm, can pay 40% of his salary as instalments for credit. In contrast, Mr Sharma, employed with Category C, will get a loan with an EMI payable up to 20% of the income.

Tenure: A Personal Loan is a short-term loan repaid in equated monthly instalments, with a minimum of 12 months and a maximum term allowed by the Bank for 72 months. The Bank sanctions the tenure according to the applicant’s requirements, income, and payable EMI.

If a customer can afford a higher EMI for the needed Loan, ask for a shorter repayment period, while a customer who needs an excess amount is issued a longer tenure by the Bank.

In both scenarios, the essential factor is that the customer must be comfortable paying the EMI.

Credit Usage: A fresh loan amount is forwarded to the applicant as per the eligibility to pay the additional EMI. The Bank considers all existing EMI the customer pays when applying for the FOIR and approving the Loan, including 5% of the credit card bill outstanding.

The credit usage ratio should be at most 30% of the income. The Lender can deny the Loan if the EMI paid exceeds the permitted credit utilisation.

Customer Profile: Lenders are keen to extend credit to customers with stable incomes and backgrounds. An ideal applicant has a good vintage of employment, a self-owned or family residence and a successful credit record.

A CIBIL Score of 720 points and above and a history of timely repayment of EMI are what most Banks look for. Such applicants are eligible to pay a higher ratio of their income as an EMI, while for first-time loan seekers with no credit history, the Bank gives conservative loan amounts.

How Can I Calculate The Monthly EMI For My Personal Loan?

• The Bank calculated a Personal Loan EMI with the following inputs:
• The Loan amount the Bank issues from ₹ 50k to ₹ 40 lakhs.
• The Interest Rate ranging from 10.5% to 21%
• The repayment tenure is from 12 to 72 months.

Using our EMI Calculator, a customer can easily calculate the EMI to pay for a Personal Loan. The EMI will change depending on the above inputs; take your pick and arrive at a suitable EMI.

However, it would be best to prioritise making timely repayments of the Loan EMI. The Lender will want to ensure that you have the financial capability to pay back the Loan amount.

Can I include the income of my family members to increase my eligibility and pay a higher EMI?

Members of a family living together share expenses and support each other. Regarding Personal Loans HDFC Bank allows family members living in the same premises to become financial co-applicants.

The co-applicant can be a blood relative or a spouse earning a regular income. The employment terms must be as per the bank’s criteria. With a boost in revenue, the eligibility will increase, and the applicant can receive the loan amount desired. The EMI for the Loan is deducted from the salary account of the primary applicant.

In Conclusion

When looking for a Personal Loan, you will try to determine the repayment schedule and how much you can pay back monthly as an EMI. However, paying the EMI as repayment is not the client’s prerogative. Banks adhere to an individual policy and decide how much Personal Loan to issue and the EMI the applicant can repay.

The post How Much EMI Can I Pay For My Personal Loan? first appeared on Yourloanadvisors.

Loan EMI Calculator: How Does it Work?

The Loan EMI Calculator is an online tool to calculate your monthly EMI for any type of loan. This tool is programmed to predict your EMI amount and the total repayable sum once you input three crucial values.
If you want to check the repayment requirements for a Personal Loan, you can use a Personal Loan EMI Calculator to compute the amount. You must input three values for the calculator to determine your monthly EMI. These are as follows:

Interest Rate: The lender determines the interest rate based on internal policies. Most banks use the Reserve Bank of India’s (RBI) repo rate as the benchmark to set the interest rate. You must fill in your lender’s interest rate as a percentage value in the EMI Calculator. In India, the interest rates for personal loans vary between 10.5% and 22%. You can check the interest rates from top Indian banks to estimate your interest amount.

Repayment Period: The loan tenure refers to the total time you have for repaying the amount. Personal Loans in India typically have a repayment tenure of one to five years. In some cases, lenders may agree to extend the tenure to six years. You must specify the number of months in your repayment period while entering details in the EMI Calculator.

Loan Amount: The amount of money you want to borrow is a critical consideration while calculating the expected EMI. You should enter this value into the EMI Calculator to determine the instalment and total repayment obligation.

You can check the estimated EMI with different values to make a choice that works for you. Try adjusting each value along the sliding scale to arrive at the expected EMI value that is affordable for you. You should consider your preferred bank’s interest rates to compute the amount.

Example of Loan EMI Calculation

Let’s assume that you enter the following values into an HDFC EMI Calculator:

● Rate of Interest: 13%
● Repayment Tenure: 48 months
● Loan Amount: 3,00,000

These Values Will Give You The Following Results:

● Monthly EMI: 8048.25
● Interest Amount: 86316
● Total Amount (Principal+Interest): 386316

You can assess these figures to determine if this loan is the right fit for you. The EMI Calculator can help you in the following ways:

● Plan Your EMI Payments: Knowing your expected EMI helps with better budgeting and ensures you do not miss a payment. Defaulting on these instalments can worsen your credit score. Hence, you should plan your EMI payments by checking the calculator before you take the loan.

● Calculate Your Total Cost of Funds: The EMI Calculator tells you how much you must pay the lender. Increasing the repayment tenure will give you a higher EMI but a lower cost of funds. You can use the calculator to estimate these values and make the right decision.

For more help with loans and repayment considerations, check out Your Loan Advisors today!

The post HOW TO USE A LOAN EMI CALCULATOR? first appeared on Yourloanadvisors.

Fast forward to the present! Credit is now an organized industry; banks and NBFC freely offer unsecured and secured credit to loan seekers in a regulated manner.

Credit has now become a way of life Credit Cards are universally held and used for payments online and offline. Ambitions and aspirations are easily fulfilled with secured and unsecured loans available from banks and NBFC.

The mode of repayment had changed drastically from when actuals were repaid in crops, gold, ornaments, and land or recently by post-dated cheques.

With the advent of digital banking enabling online transactions, the EMI or Equated Monthly Installment is now universally accepted as the norm for repayment of loans.

Paying the monthly EMI is now a regular feature common to most. Getting to know how the EMI works is all-important and will assist in planning finances.

The EMI is debited from the bank account through the Electronic Clearing Systems (ECS).

After a loan has been approved, the customer must sign the agreement documents accepting the terms under which credit is given—included in the form for ECS, enabling the lender to deduct the monthly sum for the repayment electronically.

Thus, the EMI amount per the tenure fixed is taken from the applicant’s bank account on a designated date. In most of the cases, the applicant have the liberty to decide the EMI deduction date as per their own convenience.

Break-up of an EMI

Many are not aware that though the EMI remains fixed for the entire tenure, the component of the principal and interest amount varies month on month. Banks will first recover a significant portion of interest from the EMI as the term progresses, the interest amount decreases, and the principal increase.  After half of the tenure, you will be paying back more principal than interest.

It is helpful to keep an account of the current status of interest repaid and the principal balance.

If surplus funds are available to repay the loan, it is easier to decide if it is worth the while to repay the loan. At the tail end of the tenure, the cost of the loan has already been borne. Let the loan EMI continue for the entire term; the funds available can be put to better use.

The scenario is also worth considering when Applying for a Top Up or a Parallel Loan.

How is The EMI Calculated?

The EMI is Calculated at a monthly reducing balance. As the tenure progresses, with the monthly EMI paid regularly and the loan amount owed reducing, interest will be applied to the loan’s principal balance. Therefore interest is to be paid on the reducing balance.

The EMI, though, remains the same but the composition changes. The interest chargeable is added according to the tenure to the Loan amount and divided into EMI or equated installments.

Regularly checking the same is essential to clarify what is owed to the lender and the interest amount being charged; it is an excellent option to take a Balance Transfer of the loan at a better interest rate.

Will The EMI Change if a Loan Holder Makes a Part Payment

The EMI for a Personal Loan or Home Loan remains fixed for the entire tenure a customer who wants to repay a part of the loan can do so per the stipulations.

Most individuals would like to repay debts as soon as possible when funds are available. If not the total debt but a part of it, but if the payee expects the monthly EMI will be reduced, that is not so.

The principal balance owed to the lender will reduce as per the payment made, and the repayment schedule will be adjusted. The tenure or the number of EMI to be paid will be diminished, but the amount remains the same.

The loan will have to be restructured or transferred to another lender to change the EMI.

Understanding the composition of the monthly EMI is necessary to know the extent of debt or the actual amount owed to the lender at any given time.

The EMI helps individuals build a better lifestyle, build assets, and take credit in emergencies that can be repaid conveniently, but understanding the working is not to be ignored; knowing how the EMI works will help keep credit users way ahead in their financial decisions.

How To Avoid an EMI Default

EMI is a convenient method for repayment of credit; after receiving the loan from a Bank/NBFC, it is the prerogative of the applicant to ensure a timely repayment. An EMI default can cost dearly as besides paying an escalated interest, the return will always reflect in your CIBIL and banking history. Here is our guide on 5 Ways to Avoid an EMI Default to help you plan accordingly to safeguard against any EMI default.

Estimate Your EMI Amount Using EMI Calculators

The EMI Calculator is used to arrive at the EMI payable for the entire loan amount. The EMI Calculator can predict the amount you need to repay to the financer while considering your repayment tenure and the applicable interest rate.

The post Essential EMI Guide and its Breakup first appeared on Yourloanadvisors.

The pointers enumerated below will help maintain a clear repayment record and help you avoid any EMI default.

Respect Your EMI Due Date

The monthly installment or EMI Amount is deducted from the bank account via the ECS mandate. The date for the ECS to hit the account is fixed and mentioned clearly in the loan agreement; potential dates could be the 5th to the 10th of the month.

Banks follow a standard procedure to issue a date for the EMI payment. The lender considers the salary credit date to schedule the EMI for salaried individuals. Self-employed persons have the 10th of each month as the EMI due date.

Lenders may give a pre-alert for the EMI due, but the loan holder’s responsibility is to be aware of the EMI due date and make sure there is sufficient balance in the account to clear the EMI before the date. Ignoring this may result in a EMI default under your name.

Choose an Affordable EMI Option for Your Loan

An EMI for a loan is fixed at issuance; The applicant should be confident that the EMI can be easily accommodated in the monthly budget when receiving the loan. If the EMI is not affordable, it is better to request a longer tenure or look for a lower cost of funds. 

Once accepted, the client must stand by the commitment to repay the monthly amount with interest. You can use our EMI Calculator to estimate your monthly repayment amount.

Inform Your Lender of Any Changes To The Bank Account

Business compulsions or employment shifts can initiate a change of Bank in any such circumstance the loan holder must maintain the requisite balance for the EMI to be paid. If the nominated account is discontinued, the lender must be intimated in advance and the request forwarded for a fresh ECS mandate with the details of the new account. 

This should be done well before the EMI is presented to the previous account, as if returned unpaid the repercussions cannot be reversed. In this case an EMI Default will not only result in monitory losses but it would also impact your CIBIL Score respectively.

Plan Your Expenses in Advance

When finalizing a monthly budget, all EMI to be paid must be factored in the list of mandatory expenses unplanned expenses or emergencies cannot be borne at the cost of the repayment to be made for credit. 

Provision should be made in advance and funds kept aside if such a need arises; individuals have the option of Applying For a Top-up Loan, if required.

Apply For a Personal Loan

A Personal Loan is a convenient method of acquiring funds in an emergency, processed based on documents readily available at hand. Funds are generally received within five working days after applying. The amount can be used for any personal expenses helping to tide over a shortage to clear pending dues.

Unsecured funds and secured credit are issued based on the Credit Score therefore, it is worth the while to keep an on-time EMI Repayment track to secure further credit when required.

The post 5 Ways To Avoid EMI Default first appeared on Yourloanadvisors.