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Introduction

Personal loans are unsecured loans that can be availed with minimal documentation and are disbursed fairly quickly by HDFC Bank. In recent years, HDFC bank has seen a surge in the number of individuals opting for personal loans to finance their travel, shopping, and other urgent financial needs.

These come with a flexible repayment schedule that ranges between 1 year and 5 years. HDFC Bank offers customers the option of choosing the loan tenure that is most convenient for them. These are some of the primary reasons why most people prefer personal loans over other types.

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 1 or 2 EMI payments might not look like a big deal but it does have certain negative impacts.

How Personal Loan Can Help in Emergencies

Hdfc Bank Personal Loan Emi Missed

A personal loan is also called ‘unsecured’ because unlike a house or a Car Loan, borrowers don’t have to pledge any of their assets as collateral. The lack of collateral also makes a Personal Loan an ideal choice of funding when one needs it urgently. Here are some of the ways in which a personal loan can act as a saviour during emergency situations:

  • Medical Emergency - Medical emergencies can take a serious toll on one’s finances. Even if one has medical insurance, it may not always cover all expenses. This is when an individual can apply for a Personal Loan. Money is usually disbursed quickly, and a Personal Loan is hassle-free when compared to the financial stress that can come with using up one’s savings to meet huge medical expenses.
  • Wedding - Weddings are usually a grand affair in a country like India. One may have dreamt of the perfect wedding, but to make this dream come true, they need to have adequate finances in place. Even if an individual’s budget goes a little overboard one can get a Personal Loan in just a few hours from HDFC Bank. This loan comes with no restrictions on how one uses the money. So, whether one needs the funds to take care of the catering, the flower decoration or even the trousseau shopping, a Personal Loan can help.
  • Relocation - Moving to a new home can be exciting but daunting. One could be moving because of his or her job or other personal reasons. Either way relocating is stressful and can get expensive. In a situation like this, applying for a Personal Loan makes complete sense. It can take care of any urgent expenses that may arise due to the move.
  • Unplanned Vacation - Who doesn’t love to travel? But due to financial limitations, it isn’t possible to take as many vacations as one would like to, especially if one hasn’t planned it. Sometimes an unplanned vacation cannot be avoided. So how do you go about it? The answer is simple – apply for a Personal Loan, which can be disbursed to one’s account in a few hours! With minimal documentation, one can enjoy a hassle-free holiday.

Missing HDFC Bank Personal Loan EMI Payments

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

  • Penalties – HDFC Bank charges late fees as penalties 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. HDFC Bank generally requires 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 generally contains comments about the individual’s 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. HDFC Bank 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 – Sometimes HDFC 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.

Why Missing on Personal Loan EMI Could be Bad?

What’s the big deal about missing EMI payments occasionally? 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 is why it could be bad for any individual who is looking to maintain a good credit reputation:

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

Juggling Various Loans - Repaying a Car Loan, two Personal Loans, and two Credit Card bills each month could be painful for any individual! It can get exhausting to repay different loans at different times each month. One may want to consolidate all the loans under one loan umbrella; this can ensure a fixed rate of interest, a single repayment window every month, and peace of mind.

Lack of Savings - It is never too late to set a savings goal. Saving money for the future can help one achieve various financial dreams. Many low-risk investment avenues such as Recurring Deposits, Retirement Schemes, and Mutual Funds allow one to invest regularly. One can benefit from the advantages of compound interest by making periodic/monthly investments. Lack of savings could also be the primary root cause of missing on EMI payments.

Ways to Avoid Loan Default?

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

Active Financial Planning - It is advisable that borrowers plan their finances more efficiently and well in advance in order to avoid the chances of defaulting on a loan.

Opting for a Lower EMI – If there is a possibility of defaulting on a loan payment, the borrower must approach HDFC bank and inform them of his financial circumstances and request for a lower EMI. HDFC Bank can lower EMIs by either extending the existing loan tenure or converting an unsecured loan to a secured loan. When the loan is converted to a secured loan, the interest payable on the amount borrowed is also lower. Of the 2 options, converting an unsecured loan to a secured loan is ideal since the reduction in EMIs is significant when compared to extending loan tenures.

Part Payments – Another way of lowering the EMI payments and the interest rate is to go for part payments. This method helps in ensuring that the borrower is capable of making 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 Request- A borrower can approach HDFC bank and request for 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 gives customers a 3 to 6-month waiver on EMI payments, following which the borrower must resume EMI payments.

End Note

HDFC Bank Personal loan comes at attractive interest rates and many people opt for it. However, one has to be careful about maintaining steady EMI payments to ensure that the credit standing remains unchanged. While HDFC Bank offers a lot of flexibility in repayment options, it must be used positively to ensure timely repayments.

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