Consequences of not repaying a 1 lakh loan from nbfc loan apps as a student

What happens if I don’t repay a 1 lakh loan from NBFC loan apps as a student? What are the consequences?

Hey there! If you’re a student and you’ve taken a 1 lakh loan from an NBFC (Non-Banking Financial Company) loan app but are unable to repay it, there are several consequences you might face. Here’s a breakdown of what can happen:

Immediate Consequences

  1. Late Fees and Interest: Missing a payment will likely result in late fees and added interest on your loan. These can quickly accumulate, making the total amount owed even larger.
  2. Credit Score Impact: Your missed payments will be reported to credit bureaus, negatively affecting your credit score. This can make it difficult for you to obtain loans or credit in the future, as lenders view you as a higher risk.

Further Actions

  1. Collection Efforts: If the loan remains unpaid for a significant period, typically around 90 days, it will be classified as delinquent and then may be sent to a collection agency. Collection agencies will aggressively seek repayment, which can include frequent calls and emails.
  2. Legal Action: In some cases, if the amount remains unpaid, the NBFC might decide to take legal action against you. While personal loans are unsecured (no collateral), the lender can still file a lawsuit to recover the debt. If you have provided post-dated cheques, they might try to cash them, and if they bounce, it could lead to legal charges under cheque bounce laws

Potential Solutions

  1. Negotiation and Settlement: Often, lenders prefer to negotiate rather than go through lengthy legal processes. You can reach out to your lender to discuss repayment plans or settlements. Some lenders might be willing to restructure your loan to make repayments more manageable.
  2. Debt Consolidation: If you have multiple loans, consolidating them into a single loan with lower interest rates can make repayment easier. This involves taking out a new loan to pay off existing debts, ideally with more favorable terms.
  3. Seeking Professional Help: Consider seeking advice from financial advisors or professionals who specialize in debt management. They can guide how to manage your repayments and negotiate with lenders on your behalf​​.

Lastly, It’s crucial to act quickly if you’re unable to make a payment. Ignoring the problem will only make it worse. Contact your lender as soon as you know you’re going to miss a payment to discuss possible options. Always read the terms and conditions of your loan agreement carefully to understand your rights and obligations. Good luck, and take care!