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Tata Capital > Blog > Personal Use Loan > Steps to Clear Overdue Payments with a Personal loan

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Steps to Clear Overdue Payments with a Personal loan

Steps to Clear Overdue Payments with a Personal loan

With the pandemic still atop the biggest concerns of the world right now, paying back your dues on time has probably been challenging. Especially with salary cuts, slow business operations, unexpected expenses, and emergencies, the blow has been particularly tough to bear for many. However, delaying your credit dues will only add to your misery further. From racking up interest rates to late payment charges, it’s not an easy place to be.

In such a scenario, the simplest and quickest way to tackle the situation is availing of a personal loan. Here’s why.

Merge your debts into one

One of the smartest ways to pay off your overdue payments is through debt consolidation. With this facility, you can use personal finance to consolidate all your pre-existing debt into one big debt and then repay the amount in easy EMIs.

For example, say you have credit card dues, delayed EMIs, or other pending payments on your record. In such a case, you can merge all such overdue payments – to be paid over different tenures – into one monthly installment and pay the accumulated debt over a fixed tenure. This will also reduce the overall interest amount you end up paying on the debts individually, hence making repayments easier on your pockets. You also don’t need to keep track of multiple due dates.

Additional Read: Top 5 Ways You Can Use Personal Loan to Boost Your Career

No need for obligations from near and dear ones

Your friends and family are usually the first ones you turn to in times of need. But borrowing money from them to pay off your debts might not be a wise option. Even if they were to give you the stipulated amount, not paying them back on time might cause a strain on your relationship. Also, if you borrow money from someone you are related to, there is always the pressure of paying back the entire amount in a lump sum instead of instalments.

So why take the pains? Instead of this, you can avail of a loan at competitive personal loan interest rates to consolidate your debts and save yourself the embarrassment.

Improve your credit score

Using a personal loan to clear your dues, such as pending credit card bills or outstanding invoices,can help you maintain a healthy mixture of revolving credit (credit cards) and instalment credit (loans). Timely repayments, in turn, help you avoid late payments and prove your creditworthiness as a borrower.

Not only can you avoid hefty penalties on late payments, but also avoid getting a negative record to your name. This will consequently improve your credit score and keep your track record spotless.

Additional Read: What is the highest personal loan amount one can apply for?

To sum up

If you’re experiencing a cash crunch, taking a loan is a wise move to complete your overdue payments and avoid penalties. Paying back dues on time also boost your credit profile and improve your creditworthiness.

Have a long list of pending dues? Then let Tata Capital help you out! With competitive interest rates and flexible repayment options, we can help you tide over your finances in no time. Learn about our personal loan eligibility criteria here.

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FAQs

What is the legal action for defaulters of personal loans?

If you default on a personal loan, the lender can take legal action to recover the dues. This may involve filing a civil case, leading to a court order requiring you to repay the outstanding amount.

What if I am unable to pay my personal loan?

If you’re unable to repay a personal loan, it can result in legal action against you. It may also lower your credit score and impact your ability to access loans or financial services in the future.

Can a loan defaulter open a bank account?

A history of loan defaults can make it harder to open a new bank account, as banks may view defaulters as a financial risk.

What happens if you don’t pay overdue payments?

If overdue payments remain unpaid, you may face penalties or late fees, and your credit score may drop, affecting your financial credibility.

Is overdue the same as unpaid?

No, they are different. Overdue refers to payments not made by their due date, while unpaid means no payment has been attempted at all.
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