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Introduction

A personal loan is easy to get and extremely useful in an emergency. Personal loans are relatively easier and quicker to get than any other kind of loan to tide over an emergency. A borrower can get a personal loan without any collateral.

These come with a flexible repayment schedule that ranges between 1 year and 5 years. Axis Bank offers customers the option of choosing the loan tenure that is most convenient for them. While customers have the option of selecting a repayment tenure and EMI options that are comfortable for them, there are many instances where the borrower could have trouble repaying the EMI for a particular month or time period. Missing on EMI payments may not look like a big deal but it does have certain negative impacts.

Important Aspects to Know About Personal Loan

Axis Bank Personal Loan Emi Missed

Here are some of the important aspects that borrowers must know about Personal Loans offered by Axis Bank.

  • Minimal Documentation - A Personal Loan, compared to other loans, requires minimal documentation. Typically, what is needed is the applicant’s age proof, address proof, photo identification proof, salary slip, Form 16, bank statements, Income-tax returns, and qualification proof/registration proof. These documents need to be submitted with the loan application form along with two photographs. Applicants need to be between 21 to 60 years of age and must meet the monthly net income criteria set by the bank. Axis Bank’s minimum net monthly requirement is Rs. 15,000.
  • Unsecured Loan - Applicants do not have to mortgage their existing assets; because a personal loan is unsecured, which means the loan is disbursed without the requirement to keep any asset (house, car, investments, etc.) as collateral. However, before disbursing a personal loan, Axis Bank conducts thorough due diligence. Meaning, it runs a background check on the applicant’s ability to repay and financial stability. An individual’s personal financial documents are examined carefully, plus the credit report is verified (sourced from credit information companies viz. CIBIL™, Experian, Equifax, Highmark, etc.) to judge the credit score.
  • Competitive Interest Rate - The interest rate on a Personal Loan is competitive. But applicants must keep in mind that the rate will depend on factors such as their age, income stability, whether salaried or self-employed, number of years of work experience (in the current job/business/profession, and total), their credit score, existing EMIs (if any), applicant’s repayment capacity, loan tenure, among other things. It makes sense to compare interest rates across lenders. If one gets the best rate, it will reduce the interest outgo, and this will make repayments comfortable.
  • Repayment Tenure - The repayment tenure for Personal Loan ranges from anywhere between 12 to 60 months. One has the option to decide the tenure. Note that a higher tenure can reduce the EMIs, making repayments comfortable, while opting for a lower tenure (of say 2 to 3 years) increases the EMI.
  • Flexibility and Service - In addition to the above, Axis Bank offers some amount of flexibility on the repayment process. It is important to ask relevant questions and set expectations right. For a quick approval of Personal Loan, here are few things to keep in mind:
    • Maintain a healthy credit score. Higher the credit score (of 750 and above) the better it is.
    • As far as possible do not make multiple loan applications, as it weighs on credit score.
    • Ideally, one should not have availed a personal loan in the last six months; because it does not depict a very healthy picture of one’s personal finance.
    • Keep the debt burden low (Ideally, EMIs should not exceed 40% of net take-home pay).
    • Maintain a fair balance between secured and unsecured loans, since they have bearing on the credit score.
    • Avoiding using too many credit cards, use only a couple that suits the needs and pay credit card dues before the due date.

Missing Axis Bank Personal Loan EMI Payments

Here are some of the consequences of missing out on the Axis Bank’s personal loan EMI payments.

  • Late Fees – Axis Bank charges late fees for individuals who miss their EMI payments. The amount charged could vary but is usually around 1% -2% of the EMI that is due.
  • CIBIL™ Score – One of the immediate consequences of defaulting on personal loan payments is a decrease in the credit score. Axis Bank expects borrowers to have a CIBIL™ score of 750 or more to be eligible to apply for a loan. Missing a single EMI payment can result in the borrower’s credit score dropping by 50 to 70 points.
  • Credit Worthiness - A borrower’s credit report would contain comments about repayment history. In most cases, even if the borrower’s CIBIL™ score is above 750, the comments about payment defaults in the credit report are the primary reason for personal loan rejection. Axis Bank closely views these comments in the credit report and tags such individuals as risky borrowers who will not be able to abide by the repayment terms of the loan.
  • Recovery agents – If needed, Axis Bank may deploy recovery agents when the default period has extended beyond 90 days. The bank initially issues a 60-day notice to the borrower before the loan account is tagged as an NPA. This is best avoided as it could result in unwanted stress.

Impact of Missing on Axis Bank Personal Loan EMI

Missing EMI payments occasionally? Well, it could be a problem if one is habitually careless about repayments. A missed EMI or an overdue on a personal loan EMI can spiral into a debt trap over time. Here are some of the reasons why it could be bad for any individual who is looking to maintain a good credit reputation:

Multiple Loans - Repaying multiple loans each month could be painful for any individual! It can get exhausting to repay different loans at different times each month. It is best to consolidate all the loans under one loan umbrella to ensure a fixed rate of interest, a single repayment window every month, and peace of mind.

Downgraded Credit Score - a Credit score is a check of one’s credit health and repayment capabilities. To maintain a healthy debt profile, it is advisable to keep debt records clear. Identify areas where there is a debt problem and try to work on them. For example, one may find himself stretched on the monthly budget and may, therefore, have missed a payment deadline. To get an infusion of cash and comfortably make room for other purchases, anyone would wish to consider additional Personal Loans to ease the finances. Timely repayment of Personal Loans can energize an individual’s credit score.

Impact on Savings - Saving money for future financial needs can help one achieve various financial dreams. Low-risk investment avenues such as Recurring Deposits, Retirement Schemes, and Mutual Funds allow one to invest regularly. The advantages of compound interest can be availed by making periodic/monthly investments. Lack of savings could also be the primary root cause of missing on EMI payments.

Ways to Ensure Timely EMI Payments

Here are some of the ways in which a borrower can avoid loan defaults:

Proactive Financial Planning – Personal loan borrowers must aim to plan their finances more efficiently and well in advance in order to avoid the chances of defaulting on a loan.

Lower EMI – In case of any chances of defaulting on a loan payment, the borrower must approach the Axis bank and inform them of his financial circumstances and request a lower EMI. Axis Bank has various flexibility options for lowering EMIs by either extending the existing loan tenure or converting an unsecured loan to a secured loan. If the loan is converted to a secured loan, the interest payable on the amount borrowed is also lower. Converting an unsecured loan to a secured loan is an ideal solution since the reduction in EMIs is significant as compared to extending loan tenures.

Part Payments – Lowering the EMI payments and the interest rate can be achieved by making part payments. This helps in ensuring that the borrower makes timely EMI payments for the entire loan tenure. When the borrower has surplus funds and an active personal loan, making a part payment can ease the financial burden.

EMI-free Period - A borrower can request the Axis bank to provide an EMI-free period in case he faces a crunch in the inflow of finances. Such requests are considered by the bank, especially if they have lost their job or are temporarily facing issues with business operations. The bank may consider giving customers a 3 to 6-month waiver on EMI payments, following which the borrower must resume EMI payments.

End Note

Axis Bank is known to offer attractive interest rates on personal loans and various flexibility options as far as EMI payments are concerned. Making steady EMI payments is very important to ensure a good credit standing since Axis Bank focuses mainly on clients who have a desirable credit rating.

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