Why Regular EMI payments are essential for your financial health?When you have borrowed a loan for any reason, paying EMIs on time is essential to maintain a good financial record. Undoubtedly, financial institutions offer a grace period to clear the EMIs but if you cross the extra time given and still the EMI is pending, it can affect your financial health drastically.
Equated monthly instalments give you the power to buy expensive luxury items, without having to pay the whole amount at the moment. For instance, a salaried individual booking a dream vehicle with a car loan, all credits to the easy EMI repayment method that a borrower is stress-free about paying the whole price of the vehicle in instalments.
However, before assuring the lender of regular EMI payments, borrowers should check their repayment ability and then decide the EMI. A tool called EMI loan calculator is ideal to calculate accurate EMIs in seconds. This gives borrowers a clear idea about the instalment figure. Accordingly, regular EMI payments can be made to keep the financial health intact.
Below listed are certain advantages of regular EMI payments for your financial health:
Prevents a penalty - Delay in paying EMIs can hover penalty charges. So, paying EMIs in a stipulated period eliminates late payment charges. The penalty is usually a certain percentage of the EMI amount, which may increase your financial burden.
Flexible> - Equated monthly instalments give borrowers the flexibility to buy high-end products without breaking the savings. The total amount of the product bought is broken into flexible instalments which is easy to manage as compared to paying a wholesome amount.
Easy on the wallet - Since the EMIs are well planned and distributed clearly over the loan tenure, other monthly expenses become easy to manage as the EMI amount is already planned and not an immediate financial burden breaking the cycle of monthly finances.
Disadvantages of not paying regular EMI payments that may impact your financial health:
Higher Repayments - Though monthly instalments allow you to purchase expensive items you may turn to end up paying more than the cost at the end of your repayment tenure. The excess amount reflects the interest rate charged by the lender for the use of their funds.
Charges on delayed EMIs - In case the borrower misses out on EMIs or defaults payments, the lender may levy some fees on delayed payments of unsecured loans. In the case of secured loans, if you often default on EMI payments, the lender is entitled to take over the pledged asset.
Impact on credit report - Missing EMI payment leaves a negative effect on your credit score. In the future, you may face difficulty in getting the desired loan as your credit report will not have a stable financial history.