A personal loan can be taken for various reasons like paying old debts, refurbishing the house, holiday, medical emergency, exigency of funds, investments, weddings and much more. It is an unsecured type of loan where there is no security kept against the amount borrowed. Banks usually do many background checks before sanctioning the personal loan as it is one of the risky kind of loan that is to be approved.
Divya is a very responsible adult who is in her mid-20s. Good job, dedication towards work, yearly appraisals have made her the perfect millennial! She took an HDFC personal loan for the interior that she wanted to do in her new house she just bought. The loan amount was 2,50,000. and the tenure she chose was 3 years. The first two years went well. She paid all the repayment EMIs on time, along with her regular expenditure and credit card bills. While she was turning 27, she got the biggest shock of her life. Her dad expired and being the only child in the family, there were many financial things that she had to take care of. First two-three months were okay. But then started the series of late payments and missed payments for her. As it was getting difficult for her to manage everything. Now this, led to a low cibil score for her.
After a few months, she thought for refinancing the previous loan and opt for a new personal loan to clear out the old debts. So that then, she will have the burden of only new loan that she had taken. When she went to banks, the major once got her loan rejected. When asking for the reason, she came to know that the poor handling of credits had led her to the bad score. Now, she thought if she could get a personal loan with low cibil score. There are many criteria which will be rechecked where banks or NBFCs or any financial institutions which may sanction the loan in such scenarios. Usually, private lenders or NBFCs who are famous for giving loans and bad cibil score may help in such cases. But, the only issue being looked upon is the interest rate on this loan.
Divya went ahead and tried this option. Rather than remembering different credits and getting things messed more, she thought of refinancing the older loan. She was fortunate enough to get a loan refinanced. She took a loan of 1,00,000 Rs, in order to almost 50,000 loans that were pending at the previous loan and few of her old credit card bills at the rate of 32% interest rate! Yes, she got the personal loan with low cibil score. And then she was responsible enough to pay that loan amount on time without any missed or late payments.
Humanity does exist if there is any genuine reason for the default that one has made, or the late and missed payments any lender would consider looking at the past history and they would think of taking a risk and sanctioning the refinanced loan. But do not lie. Also, the private lenders may approve the loan application with a much higher percentage of interest. So do not fall in trap thinking this may solve the current situation and let’s go for it is atleast temporarily this is getting the issue resolved this will become a catch 22 situation then, where to replay the old debt you take a loan and you fall in debt trap again!
Taking a loan and repaying it is a great responsibility on anyone's side! So all individuals who apply for a loan has to make sure that they repay them on time and be very attentive about it!