An EMI (Equated Monthly Installment) is the amount that you need to repay every month towards a loan taken for buying a house, car, or any asset.
If you are unable to repay your EMIs as per the agreed schedule, you can fall into a serious problem. Most financial institutions won’t let you skip the payment for more than a few days.
If you fail to repay the EMIs for several months and keep delaying it further, then your finance provider might seize your collateral or even repossess the asset that you had financed from them.
On top of this, if you stop making payments for 3-6 months or more, then the lender might blacklist you and prevent you from getting any future loan for some time period. In such situations, it is best to take an action as soon
What is EMI?
Simply put, an EMI is the amount that you pay towards your loan every month. Different lenders and financial institutions may have their own EMI schedule.
For example, if you get a home loan, your lender will likely ask you to pay EMIs in a regular sequence of every month. In case you are unable to pay the EMIs, your lender can ask you to pay a higher amount or even repossess the asset. Similarly, if you have taken a car loan, your lender will likely ask you to pay EMIs in a regular sequence of every month.
If you fail to pay the EMIs, your lender can repossess the vehicle, and they will also lose the security that they have on the car. There are a few other situations where your lender can ask you to pay EMIs. If you have taken a credit card loan, your EMIs will come from your credit card balance.
If you are taking one or more installment loans, your EMI will come from that loan amount.
Why you need to pay EMIs?
Just like any type of debt, when you take a loan, you are required to pay interest on it. The more money that you borrow for buying a house, car, or any asset, the higher will be the interest rate that you will have to pay on that loan.
The same is with EMI, if you are unable to pay your EMIs, then your lender will charge you interest as well. In most cases, you will have taken a loan for 25-30 years. Therefore, if you are unable to pay the EMIs for 2-5 years, you will end up paying a lot more interest that you would have if you had paid your EMIs on time. For example, if the monthly interest rate on a home loan is 15%, and you are unable to pay it for 6 months, then you will end up paying 9.25% more in interest. Similarly, if you are unable to pay your credit card interest for 6 months, then you will have to pay a lot more interest on your credit card balance.
When you can’t pay EMIs?
If you are unable to repay your EMIs, then your lender can ask you to pay interest on your loan as well as ask you to make some other arrangements. In most cases, your lender can ask you to pay a higher amount along with an extra charge or a monthly fee.
In this way, your lender can extract extra money from you. Similarly, your lender can also seize your assets, repossess your car, or ask you to make an arrangement with them. If you are unable to pay your EMIs for less than 60 days, then your lender will most likely allow you to pay a smaller amount.
This is because your lender will most likely want to collect the money from you as soon as possible so that they don’t lose any amount that might go missing in the account.
Understand Your Finances
The very first thing that you should do when you are unable to pay your EMIs is to understand your finances. The first thing you need to do is to know your monthly income and expenses.
If you are able to do this, then you will be able to figure out which month you are having a surplus and which month you are spending beyond your capacity. Once you have this data, then you will be able to figure out whether you have enough money to pay off your loan or not.
Similarly, you also need to know where your money is going. A good habit to develop is to have a monthly budget that you draw up yourself. When you have a budget in place, you will be able to see which monthly expense is consuming your money the most.
What do you do when you are unable to pay EMIs?
If you are unable to pay your EMIs, then your first step should be to take an online loan from InstantPaydayNV to tide over the situation. There are a number of payday loan companies that offer short-term loans with lower rates of interest.
There are also a number of online lenders that offer longer repayment terms with high rates of interest. In many cases, you will be able to get a loan with a yearly repayment plan. You can also opt for a payday loans near me no credit check that has a lower rate of interest with a higher amount borrowed.
If you are unable to repay the loan, then your lender might charge you a penalty or a higher interest rate.
However, it is important to note that the loan company might deduct the penalty amount from the loan immediately, and you might end up paying interest on the loan for a longer period of time.
Conclusion
In most situations, you will be able to repay your EMIs if you are able to pay your monthly bills on time. The same is with your other debts such as loans and credit cards.
You will be able to repay them if you are able to pay your monthly installment on time. If you are unable to pay any of these debts on time, then you will end up having a hard time in case you are unable to repay your EMIs. It is important to remember that no one is perfect and everyone makes mistakes.
It is important to know your finances and where all your money is going. If you are able to do this, you will be able to deal with the situation better.
