Hey,
People take unsecured loans for reasons such as debt consolidation, medical emergencies, home maintenance, buying a car, wedding expenses etc. Usually, banks look at the capacity, capital, condition, collateral, and character of the borrower before sanctioning a loan. In some cases, loans are not paid back. I will share with you what happens if unsecured loan is not paid.
Calculate EMI on home loan via the NoBroker EMI calculator. Get home loans without hefty paperwork through NoBroker What happens if an unsecured loan doesn’t get paid? CIBIL Score:Unsecured loans if not paid will ruin your credit score/ CIBIL score. Your account will be negatively impacted due to non-repayment. Missed repayment can lead to a 40- 80 point drop in your credit score.
Lawsuit:You might face problems qualifying for loans in the future. Certain institutions file lawsuits against the defaulter. You might have to show up in front of a judge.
Penalties:You will have to pay interest and penalties on the borrowed amount. Once, you have passed the repayment date. The penalties keep on increasing.
Loan Recovery process:Banks have a loan recovery process as well. Default on payment will trigger the process. Take a look at the table to know about the timeline.
0-30 days |
Grace period to make a minimum payment without incurring penalties |
30-60 days |
Late fees and possible penalties such as increased interest rate; may be reported as a late payment to credit bureaus and drop your credit score |
60-120 days |
Lender could ask for the full amount owed. Account flagged by the lender's collections department and moved to default status. Credit card accounts may be closed. |
120-180 days |
Debt discharged by lender as a loss and sold to collections agency; legal action may be taken at this stage, or debt settlement could be proposed. |
270 days |
Student loans considered in default at this stage as they have the longest grace period of all unsecured debt |
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Read more:
How to Improve CIBIL Score Immediately? What is a loan processor? What is a clean loan? What is Overdraft Loan?Your Feedback Matters! How was this Answer?
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What happens if unsecured loan is not paid?
neerav
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2 Year
2022-12-21T08:57:32+00:00 2022-12-21T16:51:59+00:00Comment
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