The loan is an inevitable part of our lives as we require it for various personal and professional reasons, be it meeting expenses for education, medical, business, etc. Having debt implies that the borrower has to make timely payment of EMIs. With the ongoing second Covid-19 wave spreading all over India, what follows is a subsequent lockdown. It adversely affects businesses and households financially. This has led to many jobs sacking or deducted income creating uncertainty among existing borrowers as to how to manage their EMI payments during such a lockdown scenario.
Borrowers need to maintain financial discipline even under times like the current crisis, otherwise, there is a risk of penalty for late payment or default on their current
loans. Also, you could end up with a low credit score putting your profile into a high-risk category, hampering your chances of getting potential loans approved.
Tips for Helping Borrowers Manage EMI Payments during Covid-19 Lockdown
Though the second covid-19 wave has led to many strict lockdowns, still with careful planning and financial prudence, a borrower can continue to manage timely EMI payments.
List down your Debt
Take a stock of your total debts and base them on the priority of amount, tenure, rate of interest, etc. This will help you to organise and manage all your loans in an efficient manner. Once organised, there is a good clarity on the debt clearance.
Clear Higher Value Loans on Priority
Once you have made a list of your total loans, then clear the high-value loans on priority as these entail more interest and penalty charges on default. Not doing so, would unnecessarily burden your already constrained finances.
Create Emergency Fund
Another way to manage timely EMIs is to have an emergency fund. The Covid-19 pandemic has highlighted the need for one to maintain some form of liquidity or emergency fund for meeting the unforeseen crisis. One should, therefore, regularly set aside a small amount in an emergency fund. Having such a fund will help you to clear urgent financial payments like EMIs, medical bills, home rent, etc.
Automate EMI payments
Another prudent manner to manage your EMI payments is to automate loan repayments. This will ensure timely deduction of EMIs without any risk of default and late payment charges. This will also lead to your credit score being on the higher side and create greater chances of potential loans getting approved easily.
Consolidate Multiple Loans
If you currently have multiple loans, then you can choose
debt consolidation loan. Consolidation of loans can benefit the borrower to switch from a high interest-bearing loan to a loan with a lower interest rate. This can also result in lower EMIs being charged in the near future over the consolidated loan tenure.
Track Credit Score Regularly
Always track your credit score on a regular basis, a credit score of 750 and above is considered a good credit score that assures lenders about your creditworthiness and financial discipline towards loan repayments.
The current Covid-19 crisis and lockdown, has led to a heavy financial crunch for many borrowers in India, making it difficult for them to manage timely EMI payments, Still by making changes to their financial planning as stated above, one can still manage their EMIs even under Covid-19 lockdown.
