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Introduction

Personal loans are an easy and quick way to get financial assistance in case of an emergency. A borrower can generally get a personal loan without any collateral. Most personal loans come with a flexible repayment schedule that ranges between 1 year and 5 years.

SBI Bank is known to offer 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.

There are many charges involved when one defaults in paying personal loan EMI. There are penalties, cheque and other miscellaneous charges involved. And if consequently every month one defaults, the charges keep building up with the EMI amount. Hence one gets burdened under increasing debts. This is why it’s best to make regular and timely payments.

Consequences of Missing EMI Payments on SBI Personal Loan

Sbi Bank Personal Loan Emi Missed

Missing out on timely EMI payments for SBI Personal loan could have some negative impact and here are some of the points that borrowers must take note of:

  • Additional Charges – SBI Bank charges penalty 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.
  • Impact on Credit Score – One of the immediate consequences of defaulting on personal loan payments is a decrease in the credit score. SBI Bank requires borrowers to have a credit 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 Standing – A credit report generally contains comments about the repayment history of a borrower. 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. SBI Bank takes note of 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.
  • Alternate Recovery Methods – SBI Bank may employ 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 Personal Loan?

While seeking a personal loan, here are some of the important facts to take note of.

  • Limited Documentation - A Personal Loan usually requires minimal documentation. SBI requires 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. SBI needs a minimum net monthly of Rs. 15,000.
  • Unsecured Loan - A personal loan is unsecured, which means borrowers can get the loan without the requirement to keep any asset (house, car, investments, etc.) as collateral. However, before disbursing a personal loan, SBI conducts thorough due diligence. 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.
  • Better Interest Rate - The interest rate on a Personal Loan is competitive. However, 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.

  • Flexible Repayment Tenure - The repayment tenure for Personal Loan could range 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.

Missing EMI Payments on SBI Personal Loan

It could be a problem if one has been missing out on EMI payments on SBI Personal loan. 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:

Lower Credit Score - 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 Loan to ease the finances. Timely repayment of Personal Loans can energise 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.

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.

How to Make Timely EMI Payments on SBI Personal Loan

Here are some of the ways in which a borrower can avoid loan defaults on SBI Personal Loan.

Periodic 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.

Adjusted EMI – In case of any chances of defaulting on a loan payment, the borrower must approach SBI and inform them of his financial circumstances and request for a lower EMI. SBI Bank has certain flexibility options for lowering EMIs by either extending the existing loan tenure or changing 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.

EMI-free Period - SBI bank can provide an EMI-free period in case a borrower 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.

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.

End Note

It is up to a borrower how he or she uses the facility of Personal loan offered by SBI Bank. However, the most important aspect to note is timely EMI payments on such loans to ensure that the credit standing is unchanged. This can increase the scope of applying for such loans in the future.

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