The Indian economy for the past few months have taken a serious beating and the economic situation seem bleak, unemployment rates have gone up and the inflation rates too have grown normal proportions.
This has obviously hurt the Indian middle class very badly. For most Service holders in India, one of the biggest thing on the monthly budget after the mortgage loan is the car loan. And it is quite logical that, in these difficult times, making a payment of the car loan goes beyond the means of many person. If you are one of those who is feeling the heat of the moment and finding it difficult to pay your car loan oon tie, read on this article.
When Do The Banks Consider Nonpayment as DEFAULT?
Well it is very difficult to define 'default' as it has no universal definition to it and differs from lender to lender and bank to bank. However in general practice , if you are 30, 60 or 90 days late on not making one or more payments, you are considered to have defaulted on making the repayment.
As mentioned earlier, what constitutes a default generally vary from bank to bank. In fact there a prescribed number of payment failure which is mentioned on the car loan agreement that you signed with the lender bank which would mention clearly as to how many nonpayment’s constitute a default. The agreement would also provide the risks involved and the possible solutions in case of a default.
Now coming to reality, once you realize the fact that you are going to face big difficulties in making your car loan payment, you should take immediate steps to avoid being tagged a “ default customer”.
So what should you do now? Well though the logical things to do is to give up your car, but it’s advisable to try the following steps before you take any such decision.
1. Extend the duration of the loan – This is a step that would give you ample breathing space. Try to talk to your lender/bank to extend your car loan duration. So while your normal loan duration is 36 months, you can extend that to 48 months. This ensures that your monthly commitment is reduced.
2. If Possible, defer your loan payment – Request your lender bank to consider deferring your payment. This will allow you to skip the current month's payment and make it at a later date. You need more than a formal request . You have to make the lender your position and seek their approval.
3. Request to change the payment due date - If you could convince your bank to change the payment due date permanently, it might help you in your repayment schedule.
4. Request for waiver of late charges - Charges are often levied on your late payments. If you feel that these accumulated late charges are actually straining you and hampering your paying capacity, you can ask your lender/bank to waive these fees. If it would help you make a timely payment, the lender/bank might agree.
Defaulting on a loan is one of the worst thing to happen and if you are being forced into a situation where you find it difficult to manage your finance and yet have the burden interest payment of your car loan hanging on your head, you can try any of the aforementioned points for solution and hope that something works out for you.