Expenses are a necessary part of our life. You cannot just stay away from them. They are bound to happen in one form or the other. And sometimes it may happen that your expenses exceed your total earnings. In that case, you invariably tend to fill the gap by borrowing money or take up loans. That’s alright. But the problem arises when you are not able to repay the loan(s) that you had taken.
You default on your loan repayments. So are you also one of those persons who are facing the same problem? Are you on the way of becoming a Defaulter? If such a situation exists with you then read on, as the present post is dedicated to analyze this problem and presents you with the right solutions to overcome the problem of being a defaulter.
Well at first it seems an easy way out to go for taking a loan whenever you fall short of money. Suppose you want to buy a luxurious car, planning for a vacation, want to furnish your house, want to buy a new house or want to meet your children educational expenses. The immediate and obvious solution seems to approach the bank for taking up a loan. Here you do not analyze your overall financial condition and loan repayment capacity and opt for taking up a loan.
Once you have taken up a loan, next comes another important aspect attached to it that is the loan repayment. The loan repayment is spread out in the form of monthly installments for a definite period of time and consists of two components that is the principle and interest amount. You continue to repay the loan till you had paid the original loan amount and as well as the interest.
Loan Repayment Defaults
But sometimes it may happen that your loan repayment does not result into a smooth journey. You start to repay the loan in the form of monthly installments but due to one reason or the other you default on your loan repayments and end up not repaying the required amount. This hampers your overall credit ratings and next time when you need money and apply for a loan, you would not get the loan as you had earlier defaulted on your loan repayments.
This situation has arisen because you had not calculated your repaying capacity and had not planned your monthly budget allocations. Without a proper planning of your monthly expenses you would end up being a defaulter. Here it is very important to understand that taking up a loan means an extra burden on your monthly expenses. That is an increase in your overall monthly expenses. So you need to monitor that your earnings should always exceed your expenses to accommodate for the loan repayments easily.
The situation may become worse if you are not able to repay the loan installments month on month. That means you are not able to keep the overall expenses under control so much so that you are not able to repay the loan installments. So one thing is aptly clear that before taking a loan you should always plan your expenses so that you are able to repay the installments.
Taking Corrective Measures
So you need to keep a watch whether you are paying your loan installments or not. And when you find that you have defaulted, then you should not be late in taking corrective measures. Well you have to reduce your monthly expenses so as to accommodate the monthly loan repayments within the amount that you are earning. Here planning your monthly expenses is a must. Then you have to make it a point to stick to the monthly budget that you have prepared. Also you can work extra time to increase your earnings. That would really help. You can also take up a better paying job so as to increase your earning capacity.
Here it is important to note that at a time you should not have too many loans running at the same time. That makes you cramped as far spending power is concerned as a huge portion of your earnings goes to repaying the loan installments. Then you are not with any amount to spend on other necessary things. So if it is not very important, you should avoid taking a second loan when one is already running.
So you have to check it regularly that Are you on the way of becoming a Defaulter? If not then there is no need to worry else you can adopt the ways as suggested above and come out of such a situation.