Inability to repay loan may cost you much more than you actually anticipate. Yep! I know COVID has basically taken a toll on our financial health and there are many of us who find it really difficult to repay loans. But what happens if the borrower fails to repay the loan? Well, consequences are not at all favourable. Here is what I am talking about.
You will be bombarded with calls for repaymentIt starts with this. Banks and financial institutions send you daily calls and reminders as a second chance to repay your loan. They may levy some penalties and delay charges but they will give you an opportunity to pay them back.
You will lose your collateralIf you had taken a secured loan, you may end up losing your collateral. Remember you signed an agreement with the bank at the time of loan processing, yeah, it also mentions that in the event of no repayment you can lose your collateral as a form of recovery by the bank.
You can lose your assetThe banks also have the rights to seize your asset and auction it off in case you are wondering what happens if the borrower fails to repay the loan. They have the right to do that under SARFAESI Act 2002.
What is SARFAESI Act? Your credit score will be under the bridgeYou may not realize but having a badly affected credit score due to non repayment of loan will speak volumes about your staggering financial health. A first time defaulter is usually at a risk of losing 50-70 points.
Find out what is a good credit scoreThese are a few things that can happen if you don’t repay your loan.
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What happens if the borrower fails to repay the loan?
Rashi
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3 Year
2021-09-17T15:54:03+00:00 2021-09-17T18:30:42+00:00Comment
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