Sometimes a time comes that people have to leave their jobs. People have to face a lot of problems after leaving the job. It becomes difficult for them to repay home loan, car loan and personal loan. People are unable to repay the loan on time and default. This affects the CIBIL score and makes it difficult for people to take loans for other needs. As everyone knows, repaying debt is a legal, moral and financial obligation. If you have missed a job or are negligent in making repayments, you may be stuck in a debt trap. So through this article, we are going to tell you 8 such ways, with the help of which you can get out of the debt trap.
1. Talk to the bank
If you have missed your job and you know that you can default, then you should contact the bank and tell the bank in detail about your current situation. In such a situation, the bank can modify the loan by extending the loan period, which will reduce the EMI burden. This can help you repay on time and maintain a good credit score. A CIBIL score of over 750 means that a home loan can be easily approved. The interactions you have with the bank and your relationship with the bank play an important role to reduce the burden of EMI. One such case was in which a customer took a car loan from the bank, but was unable to repay it, as he had lost his job. He was having a lot of trouble in repaying the car loan EMI. In this situation he approached the bank and agreed to charge interest on the car loan for only 6 months until he got a new job. This benefited the two parties slightly as the bank survived NPAs (non-performing assets) and the customer’s credit score was also not affected.
2. Stop using credit card
If you have missed your job or the company has cut your salary, then you should stop using credit card immediately. If you use a credit card without sufficient income, you will be stuck in a debt trap. In such a situation, credit cards entice the customer to choose the minimum option, but you should not get caught up in it. This will be your biggest mistake. You will have to pay 2-3% monthly interest on your credit card balance.
3. Liquidate investment and repay debt
If you have an FD, then liquid it and repay the loan. The interest on FD is about 6.5-7% per annum, while personal loans attract interest of 14-18% in a year. Credit cards charge 24-36% in a year. Hence why paying 14% interest on personal loan by getting only 7% interest on FD.
4. Automate loan payment
Automating the payment of debt develops financial discipline and helps repay the debt. Set up ECS mandate in the bank for automatic payment of EMI. Repaying the loan EMI on time reduces the debt and avoids penalty for late payment. Also your credit score is not affected and you can easily get a loan.
5. Repay high interest rate loan
It is better to pay off the expensive debts such as personal loans and credit card dues, which attract higher rates of interest. Such loans charge a higher rate of interest and you get caught in the debt trap. Therefore, first of all repay such loans and protect yourself from the debt trap.
6. Consolidate debts
If you have several debts, it is better to consolidate them. Consolidating all debts into a single loan requires you to pay only one EMI. Consolidate home loan, personal loan and credit card loan etc. into a single loan, this will make you easier to track and you will be able to repay the loan in a more managed way.
7. Don’t take too much debt
Do not take more loan than you can afford and more loan than you can afford. If you are already troubled by debt, then avoid taking more loans. All your EMI and credit card dues should not exceed 40% of take-home pay. If you do not have a lot of debt even after leaving the job, by repaying it regularly, you can avoid getting caught in the debt trap.
8. Can choose debt settlement option
Debt settlement is an attractive option. This can help you repay your loan. In this, you do not have to pay full interest of the loan. It helps in paying the dues of the principal dues. After this process, the loan is considered repaid, but it affects your credit score for many years.