Personal loan: Many times we are unable to pay the EMI of our loan due to sudden job loss, business closure or any financial crisis. In such a situation, you do not need to worry. You can get out of the debt trap by adopting some measures. Many times people take a second loan to repay one loan and then take a third loan to repay the second loan. This should never be done, otherwise you will get trapped in the debt trap. Let us know what to do when you are unable to repay the loan.

Ask the bank for some time

If for any reason you are not in a position to repay the loan, then first talk to the bank or NBFC company from which you have taken the loan. You can get some help by talking to the bank. Inform the bank about your situation and clearly state for how long you cannot pay the loan EMI. Looking at your situation, the bank decides whether it will give you time or not. It is possible that you ask for a 1-year grace period to repay the loan EMI but the bank refuses to give this time or the bank may give you more time to repay the loan depending on your situation.

Get the loan restructured

If you do not have the money to pay the EMI, you can talk to the bank and get the loan restructured. In this, the EMI of the loan is reduced but the loan repayment period increases. Suppose, a person had taken a loan of Rs 5 lakh for 5 years. That person was paying an EMI of about Rs 11 thousand every month. He kept paying the loan EMI on time for 3 years. When the financial condition worsened, he asked the bank to restructure the loan. The bank extended the remaining amount for another 5 years. In such a situation, where earlier the person was paying an EMI of Rs 11,000, now he may have to pay an EMI of only Rs 6 to 7 thousand.

Transfer the balance

Many banks also provide the facility of Balance Transfer (BT) of the loan amount. In such a case, the bank offers to give more money in the form of loan. This ends the old loan and a new loan starts. Also, the person taking the loan gets more money which he can use to improve his financial condition. There are many banks which offer loans at a lower interest rate than the old bank. It would be better to choose such a bank for BT. Bank loans and credit card loans can also be converted into BT. However, many banks do not include loans taken from NBFC companies in BT.

Get loan settlement done

If a person is not paying EMI even after repeated calls from the bank, then the bank can ask for settlement. This is called One Time Settlement (OTS). In this, the banks do not take the entire remaining loan amount, but take only 10 to 50 percent and waive off the rest. Most banks give 1 week’s time to settle the amount.