Personal loan: Personal loan has become the easiest option for those who suddenly need money, be it for marriage, medical expenses, or to pay any important bill. Because these are unsecured loans, banks give them without any guarantee or security. But this seemingly simple loan can sometimes become a big problem especially if you are not able to pay the EMI on time.

In case of loan default, the bank is not limited to just making phone calls. Within the rules, the bank can send a notice to the borrower, send a recovery agent and can also take legal action if necessary. Let us understand this in detail..

1. Personal loan is unsecured, still the bank can take legal action

Personal loan is an unsecured loan i.e. it does not require any kind of guarantee. However, this does not mean that the bank cannot take action against the borrower in case of default. Keep in mind that the interest rates on personal loans are quite high, so delaying payment can be costly.

2. When do you become a loan defaulter?

According to RBI rules, if a borrower does not pay EMI three times continuously then he is declared a defaulter. But banks do not take immediate action. First they send reminder notices and charge late penalty. After that they try to resolve the matter through talks.

3. Know when legal steps are taken?

If there is no response from the customer or the bank does not get the money back then the matter becomes serious. In such-

In such a situation, the bank can take the help of recovery agencies.

Agents may call you or come to your home to ask for payment.

If the loan is still not repaid, a case can be filed in the bank court.

You can receive your salary directly on the orders of the court.

4. Has full impact on CIBIL Score

Defaulting on a personal loan spoils your credit score.

Your CIBIL score gets reduced due to which merchants may be refused loan from any bank or NBFC.

Okay, later you repay the loan but there remains a blemish in your repayment period which can become detrimental in future.

5. What to do if you are not able to pay EMI?

If you are not paying EMI for any reason then first contact your bank.

Request for re-rolling or moratorium from the bank.

Never ignore the notice.

If necessary, consult a financial advisor.

Changes can be made in the EMI plan by talking to the bank.

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