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Do not panic if you are unable to pay EMI due to sudden job loss, business shutdown or any other financial crisis. First of all, contact the bank and explain your situation. They can give you options like reducing EMI, restructuring, or giving a moratorium for some time. By acting wisely, you can get out of this financial challenge.

It is important to remember that taking another loan to repay one loan can trap you in a vicious cycle of debt, so this should be avoided. Let us know what steps should be taken when you are not able to repay the loan.

Ask for time from the bank-

If you are not in a position to repay the loan for some reason, first contact your bank or NBFC from which you have taken the loan. Inform them about your situation. Either through email or by visiting the bank branch, meet the loan department officer. Request relief in EMI payment from the bank for some time. Tell them clearly how long you are unable to pay the EMI. The bank will assess your situation and decide whether to give you additional time or not. They may agree to your requested period (eg 1 year) or give a shorter period.

Get the loan restructured-
If you do not have enough money to pay the EMI, you can request the bank to restructure your loan. Restructuring usually reduces the EMI amount but increases the loan repayment period.

For example, if you had taken a loan of Rs 5 lakh for 5 years and paid the EMI regularly for 3 years, then in case of financial difficulty the bank may extend the period to repay the remaining amount, which will reduce your EMI.

Get a balance transfer (BT)-
Many banks allow you to balance transfer your existing loan. In this, the bank gives you a new, possibly larger amount loan. With this new loan, you can repay your old loan and also get additional money. This additional money can help improve your financial condition.

Some banks also offer loans at a lower interest rate than the old bank, so choosing such a bank for BT can be beneficial. Both loan and credit card loans can be balance transferred. However, note that some banks do not include loans taken from NBFCs in BT.

Get loan settlement (one-time settlement)-
If you are unable to pay EMI despite repeated contact with the bank, then the bank can give you the option of one-time settlement (OTS). In this, the bank accepts a lump sum payment of 10 to 50 percent of your outstanding loan amount and waives the remaining amount. Usually, banks give about a week to pay the settlement amount. By understanding these options, you can manage your loan even in a financial crisis.

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