What to do When your Loan Goes Bad


What various lending websites want you to feel with the concept of loans is powerful, confident, matching up with the style of the world. What you should take this as “With power, comes great responsibility”. In this piece, we are going to discuss about the times when your loan goes bad. Nobody wishes for their finances to bad or even weaken down a little bit, but, the circle of life, things do tend to go down. They make us stronger, wiser and prepared to be better and do better.

For this article, we took some advice from loan officers in various banks, and talked to some of the people whose loans have gone bad. Less than 1% of the customers had intention of making their loans go bad and do claim that they “didn’t know what to do”.

Here we are listing a few things, you can think of doing when you find difficulty in paying back the loan.

1. Check your savings: While calculating the eligibility and EMI for the loan, lenders do leave some part of the monthly income for consumption. For example, if your take home salary is 35,000 rupees, the lender would consider, say 60 or 70 percent of it for calculating the instalment of the loan. The rest would be considered for EMI.

Whatever remains after paying your EMI and daily expenses, make sure you make savings out of it on a regular basis. When a highly qualified individual at the bank decides your loan, it sure seem obvious that you are savings are also planned by one such individual only. When havoc comes on you, your first sight would be these savings only.

You can also give a thorough look to your PF, NPS and PPF funds which do give an option for withdrawal after a certain amount of time. Cashing in your life insurance policies can also be a solution as the amount is usually large enough and can take care of your borrowings.

2. Tell the lender: Running from the lender is always a problem. Be it a bank, NBFC or an individual, running away from him is a lot cowardly than going to him with all the courage and telling him about the problem. The bank would not want the loan to go bad and might give you solutions like repayment holidays (when you do not need to pay back the EMI for a certain time) or reduce the EMI of the loan as per your budget.

Bad Debt

3. Find solutions for more income:  The first reason that the lender chose to give a loan was your job or the business you did. If you don’t have it right now, do not forget that your work and you were thoroughly tested for it by the lender and you did a good job at it. Do not lose hope when you get out of business or lose your job, you can always work for another and there is a always a seat vacant for the one who is good at his job. You can even find free lancing work over the internet or off line and cash in your hard work.

Most important among all these is to be confident or at least act confident in front of others.

People lose their homes, are defamed, abused, sued and are even made to go absconding for what they could have solved with just some patience and help. Be wise whenever you borrow from an institution. Never over borrow and never pay less than what is needed to be paid.

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