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The world is so confusing sometimes as it is tough to judge a person’s intentions. Just imagine a loan is taken to clear another loan and this chain continues instead of putting a break at some point of time. Well, taking loans is not a bad idea altogether, but every measure has to be taken to repay it within the specified time. There are many types of loans, namely, home loans, student educational loans, auto loans, debt consolidation loans, personal loans, etc. Each of the types of loan has its own terms and conditions but a common condition “to repay the loan within a specified time” applies to all of them.
A Personal loan can be defined as a fixed amount to fulfill personal needs. This loan carries a fixed rate of interest and has to be repaid with a specified time. A personal loan may be secured loan or unsecured loan. Well, it depends on the credit rating of the customer. If the customer has a good credit rating, without any question, the banks or the money lenders lend the loan amount to the customer as they are confident that customer will repay the total amount, i.e., principal + interest amount within the due date. But the problem arises when the customer does not have a good credit rating. In such a situation, the lenders will ask for collateral security before issuing the amount. Normally personal loans carry a high rate of interest when compared with other loan types, and the maximum tenure is up to 5 years.
Normally, when a bank or lender is approached for a loan, they will ask for the purpose. So, based on the purpose, there are certain documents which need to be submitted related to the purpose. For example:- if a customer approaches for a home loan, then he/she will have to submit documents related to the house along with other documents. But in the case of personal loans, no such documents will be necessary as there is no need to specify the reason. Only documents required will be income certificate, address proof, and identity proof. Even the process involved in sanction of a personal loan is simple when compared to other types of loan. Only criteria applied is the credit rating of the customer. Check NationaldebtRelief.com for more information.
Personal loans are normally taken when there is no specific reason, but still there are some general expenses such as travel plans-either alone or with family; to clear of some other debts; repairs and modification of house; for marriage expenses; medical treatment (in case of no medical insurance or non- sanction of medical insurance); purchase of some household items, etc.
Like other types of loans, even personal loan amount needs to be repaid. You can either repay it in equated monthly installments (EMI) depending on the loan amount, tenure and interest rate, or lump sum amount based on the agreement between you and the banks or lenders.
There is a straight and direct effect if the loan amount is not paid within the time. The interest charges will increase, along with a lot of financial stress. There will be repeated reminders from the banks or lenders reminding you of the due amount to be repaid. Your due amount will pile up. Your credit rating will start decreasing, and it will be difficult to get a loan from any other source. Your collateral security (if any) will be taken by the lender.
The movement one takes a loan (whether a personal loan or any other type of loan), one must be prepared to face the consequences in case of default in payment. Well, there is no need to worry as there is a solution to every problem. Some of the solutions available for the rectification of default in payment of personal loan are:-
The credit rating can be good only if your repayment of debts is made periodically without any default. Management of debts repayment is a tactic, and everyone should practice this to enjoy a peaceful life
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