Importance of Repaying Your Home Loan Faster

Repaying your home loan faster isn’t just about financial freedom, it’s about securing your future and maximizing your investment. Here’s why it’s essential:

Interest Savings: One of the most significant benefits of repaying your home loan faster is the amount of interest you’ll save over the loan term. By reducing the duration of your loan, you’ll pay less interest overall, potentially saving thousands of dollars in the long run.

Debt Relief: Carrying a large debt burden can be stressful and limit your financial flexibility. By paying off your home loan sooner, you’ll experience a sense of relief and gain greater control over your finances.

Build Equity Faster: Equity is the difference between your home’s market value and the outstanding balance on your mortgage. By repaying your loan faster, you’ll build equity in your home more quickly, giving you greater financial stability and options for the future.

Financial Security: A paid-off home provides a significant source of financial security. It frees up your monthly budget, allowing you to allocate funds towards other financial goals such as retirement savings, investments, or education funds.

Methods to Accelerate Your Home Loan Repayment

Now that we understand the importance of repaying your home loan faster, let’s explore some effective methods to expedite the process:

Make Biweekly Payments: Instead of making monthly payments, consider switching to a biweekly payment schedule. By making half of your monthly payment every two weeks, you’ll end up making an extra month’s payment each year, reducing your principal faster and saving on interest.

Round-Up Payments: Round up your monthly mortgage payment to the nearest hundred or even thousand rupees. The additional amount may seem small, but over time, it can make a significant impact on reducing your loan term.

Lump Sum Payments: Whenever you receive a windfall such as a tax refund, bonus, or inheritance, consider using a portion of it to make a lump sum payment towards your mortgage principal. This can help you pay down your loan faster and save on interest.

Refinance to a Shorter Term: If you’re in a position to do so, consider refinancing your home loan to a shorter term. While your monthly payments may increase, you’ll pay off your loan faster and save on interest over the life of the loan.

Protecting Your CIBIL score

While it’s important to repay your home loan faster, it’s equally essential to ensure that your efforts don’t negatively impact your credit score. Here are some suggestions to help you maintain a healthy credit profile:

Pay On Time: Ensure that you make all your mortgage payments on time to avoid late fees and negative marks on your credit report.

Keep Credit Utilization Low: Avoid maxing out your credit cards or taking on additional debt while focusing on repaying your home loan faster. High credit utilization can negatively impact your credit score.

Monitor Your Credit Report: Regularly check your credit report for any errors or inaccuracies that could potentially harm your credit score. Promptly dispute any discrepancies you find.

Diversify Your Credit: Having a mix of credit types, such as mortgage loans, credit cards, and installment loans, can positively impact your credit score. However, only take on additional credit if you can manage it responsibly.

Conclusion

In conclusion, repaying your home loan faster is a worthwhile goal that can lead to significant financial benefits. By implementing strategies such as making extra payments, refinancing, and managing your credit responsibly, you can accelerate your journey towards homeownership and achieve greater financial freedom. Remember, it’s not just about paying off your loan, it’s about securing your future and building a solid foundation for financial success.

Loansettlement.com is India’s leading loan settlement platform. We have a proven track record of successfully settling loans for our customers. Our team of experts will work with you to create a customized repayment plan that fits your budget and helps you get out of debt as quickly as possible. We understand the stress and anxiety that comes with being in debt, and we are here to help you get out of it as quickly and easily as possible.

If you are struggling to repay your loans, register with us today at https://loansettlement.com/

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Importance of Understanding Different Loan Types

Before diving into the world of loans, it’s essential to recognize the significance of comprehending the various options available. Making uninformed decisions when borrowing money can lead to financial strain and potentially long-term consequences. By understanding different loan types, borrowers can:

• Make Informed Borrowing Decisions: Each loan type comes with its own set of terms, interest rates, and repayment options. By familiarizing themselves with these aspects, borrowers can choose the loan that best fits their financial situation and goals.
• Avoid Unnecessary Debt: Understanding the purpose and terms of different loans helps borrowers avoid taking on unnecessary debt. It enables them to assess whether a loan is truly needed and whether they can comfortably manage the repayment.
• Save Money: Comparing loan options allows borrowers to find the most cost-effective solution. By selecting a loan with favorable interest rates and terms, borrowers can save money on interest payments over the life of the loan.
• Protect CIBIL score: Defaulting on loans or choosing the wrong type of loan can negatively impact one’s credit score. By understanding loan terms and repayment requirements, borrowers can protect their creditworthiness.

Also Read: https://www.loansettlement.com/blog/cibil-score-for-loan-how-important-is-it/

Comparing and Contrasting Different Loan Types

Now, let’s compare and contrast some of the most common types of loans based on key factors such as interest rates, repayment terms, eligibility criteria, and benefits:

Personal Loans

• Interest Rates: Typically higher interest rates compared to secured loans.
• Repayment Terms: Fixed monthly payments over a predetermined period.
• Eligibility Criteria: Based on credit score, income, and other financial factors.
• Benefits: Flexibility to use funds for various purposes without collateral.

Mortgages

• Interest Rates: Generally lower interest rates compared to unsecured loans due to the collateral (the property being financed).
• Repayment Terms: Long-term repayment plans spanning 15 to 30 years.
• Eligibility Criteria: Factors include credit score, income stability, and debt-to-income ratio.
• Benefits: Allows individuals to purchase homes without having to pay the full purchase price upfront.

Payday Loans

• Interest Rates: Extremely high annual percentage rates (APRs), often exceeding 400%.
• Repayment Terms: Typically due on the borrower’s next payday, leading to short repayment periods.
• Eligibility Criteria: Minimal requirements, usually proof of income and an active bank account.
• Benefits: Provides quick access to funds for individuals facing urgent financial needs, albeit at a high cost.

Debt Consolidation Loans

• Interest Rates: Vary depending on creditworthiness and collateral.
• Repayment Terms: Consolidates multiple debts into a single monthly payment, often with a longer repayment period.
• Eligibility Criteria: Requires decent credit score and sufficient income to support repayment.
• Benefits: Simplifies debt management by combining multiple debts into one loan with potentially lower interest rates.

Conclusion

Understanding the different types of loans empowers individuals to make informed borrowing decisions tailored to their needs. Whether it’s obtaining a personal loan for unexpected expenses, securing a mortgage to purchase a home, or consolidating debts for better financial management, each loan type serves a specific purpose. By comparing factors such as interest rates, repayment terms, eligibility criteria, and benefits, borrowers can navigate the borrowing process confidently while minimizing financial risks.

Before embarking on the journey of acquiring a loan, take the time to research and understand the available options. By doing so, you’ll not only secure the financing you need but also pave the way for a healthier financial future. Remember, informed borrowing is the key to achieving your financial goals while avoiding unnecessary debt burdens.

Register with us today at https://loansettlement.com/ to get started! Our team of experienced professionals can help you negotiate repayment plans with your lenders.

In addition to offering tailored advice and guidance, Loansettlement.com also provides access to financial education materials that can help you make informed decisions about your finances. Whatever situation you are in, don’t hesitate to reach out for help with your loan payments. We understand that everyone’s situation is unique, so we offer personalized advice and assistance that fits your specific needs. With the right advice and assistance, you can get back on track and make progress toward becoming debt-free once again.

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1. EarlySalary: EarlySalary is a popular instant loan app that provides quick access to funds with minimal documentation requirements. Whether you have a low CIBIL score or need an instant loan without documents, EarlySalary offers flexible borrowing options tailored to your needs.
2. MoneyTap: MoneyTap is another leading instant loan app in India that offers a line of credit to users, allowing them to borrow funds as per their requirements. With MoneyTap, you can settle your loan process swiftly and conveniently manage your debt with ease.
3. PaySense: PaySense is renowned for its instant loan offerings, catering to individuals with varying credit scores. Whether you need an instant loan without a credit score or prefer a seamless loan settlement process, PaySense provides personalized borrowing solutions.
4. CASHe: CASHe specializes in providing instant loans to young professionals and individuals with low CIBIL scores. With its innovative credit scoring system, CASHe offers quick access to funds without the hassle of traditional documentation.
5. FlexSalary: FlexSalary is a reliable instant loan app that offers salary advances and personal loans to individuals facing short-term financial crunches. Whether you need an instant loan without CIBIL or documents, FlexSalary ensures a hassle-free borrowing experience.
6. LazyPay: LazyPay, powered by PayU, offers instant personal loans with flexible repayment options. Whether you’re looking for an instant loan without a credit score or prefer a seamless loan settlement process, LazyPay caters to your financial needs.
7. NIRA: NIRA is a popular instant loan app that specializes in providing small-ticket loans to salaried individuals. With its user-friendly interface and quick approval process, NIRA ensures that you can access funds instantly, without the need for extensive documentation.
8. mPokket: mPokket is a preferred choice among college students and young professionals seeking instant cash loans. With its simplified loan application process and swift disbursal of funds, mPokket makes borrowing hassle-free for individuals with low credit scores.
9. MoneyView: MoneyView offers instant personal loans to individuals based on their financial profiles and repayment capabilities. Whether you need an instant loan without CIBIL or prefer a transparent loan settlement process, MoneyView provides flexible borrowing options.
10. KreditBee: KreditBee is a trusted instant loan app that caters to the diverse financial needs of individuals across India. With its quick approval process and minimal documentation requirements, KreditBee ensures that you can access instant loans without any hassle.

In conclusion, the availability of instant loan apps has revolutionized the way individuals access financial assistance in India. Whether you’re facing a cash crunch or need urgent funds, these top-rated instant loan apps offer convenient borrowing options tailored to your specific requirements. With the Reserve Bank of India (RBI) approving these loan apps, you can rest assured of their credibility and reliability in providing instant financial solutions.

Loansettlement.com is India’s leading online loan settlement company and can help you with debt relief advice.

Register with us today at https://loansettlement.com/ to get started!

Our team of experienced professionals can help you negotiate repayment plans with your lenders.

In addition to offering tailored advice and guidance, Loansettlement.com also provides access to financial education materials that can help you make informed decisions about your finances.

Whatever situation you are in, don’t hesitate to reach out for help with your loan payments.

We understand that everyone’s situation is unique, so we offer personalized advice and assistance that fits your specific needs.

With the right advice and assistance, you can get back on track and make progress toward becoming debt-free once again

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What is a Default Payment?

A default payment occurs when a borrower fails to make an installment payment on their loan or credit account as per the agreed-upon terms and schedule. Whether it’s a personal loan, credit card, or any other type of loan, missing a payment deadline triggers the default status.

Consequences of Missing a Payment

Late Payment Fees: The immediate consequence of missing a payment is often the imposition of late payment fees by the lender. These fees can add to the financial burden of the borrower, making it more challenging to catch up with payments.

Negative Impact on Credit Score: A missed payment, especially if it escalates to a loan default, can significantly impact the borrower’s credit score. Being labeled as a personal loan CIBIL defaulter or having a default status on a credit card settlement can adversely affect one’s creditworthiness and ability to secure future credit.

Accumulation of Interest and Penalties: Apart from late fees, defaulting on a payment can lead to the accumulation of interest and penalties, increasing the overall amount owed. This can exacerbate the financial strain on the borrower and make it harder to resolve the default.

Legal Action and Debt Collection: In severe cases of loan default, lenders may resort to legal action to recover the outstanding amount. This can involve debt collection agencies, court proceedings, and even asset seizure in extreme situations.

Also Read Rebuilding Your Credit with a Low CIBIL Score Credit Card: Tips and Tricks

How to Avoid Default Payments

Set Up Reminders: Ensure you never miss a payment deadline by setting up reminders or automatic payments. This helps you stay on top of your financial obligations and avoid default status.

Budgeting and Financial Planning: Create a budget that accounts for loan repayments and prioritize timely payments. Effective financial planning can help you allocate resources efficiently and avoid default situations.

Communicate with Lenders: If you anticipate difficulty in making a payment, communicate with your lender proactively. Many lenders offer assistance programs or options for loan settlement that can help you navigate temporary financial hardships.

Seek Professional Advice: In case of financial distress or difficulty managing debts, consider seeking advice from financial advisors or credit counseling services. They can provide guidance on debt management strategies and help you avoid default payments.

Register with us today at https://loansettlement.com/ to learn more about our services and how we can help you!

Conclusion

Understanding the concept of default payments and their consequences is essential for borrowers to maintain financial health and creditworthiness. By staying vigilant, communicating with lenders, and seeking assistance when needed, borrowers can mitigate the risk of default and navigate their financial obligations responsibly. Remember, prevention is always better than cure when it comes to default payments.

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The Responsibilities of a Recovery Agent

Recovery agents are tasked with the responsibility of locating and negotiating with individuals who are unable to meet their financial obligations. Recovery agents play a pivotal role in locating defaulters, negotiating repayment plans, and ensuring legal compliance. These responsibilities are designed to facilitate financial rehabilitation, but concerns about harassment highlight the need for a balanced approach.

Locating Defaulters

One of the primary tasks of a recovery agent is to locate individuals who have defaulted on their financial commitments. This involves thorough research, often utilizing advanced tools and databases to trace individuals who may have changed locations or contact details. While locating defaulters is a critical task, it is essential for recovery agents to exercise discretion and respect individuals’ privacy. Harassment concerns often arise when agents resort to intrusive methods that may cause distress to debtors.

Negotiating Repayment Plans

Once located, recovery agents engage in negotiations with defaulters to establish viable repayment plans. These negotiations require a delicate balance between empathy and assertiveness, as agents work to find solutions that are both realistic for the defaulter and acceptable to the lending institution. Negotiations require a delicate balance. Harassment concerns may surface if recovery agents employ aggressive tactics, undermining the spirit of cooperation necessary for establishing reasonable repayment plans.

Legal Compliance

Recovery agents must adhere to strict legal guidelines and ethical standards. To avoid potential harassment issues, recovery agents must strictly adhere to legal guidelines. Awareness of the legal landscape surrounding debt recovery is crucial to ensure that all actions align with ethical standards, protecting the rights and well-being of debtors.

The Impact of Recovery Agents

The work of recovery agents extends beyond mere debt collection; it contributes significantly to the financial rehabilitation of individuals. By facilitating communication and negotiation, recovery agents create pathways for debtors to overcome financial challenges and rebuild their creditworthiness.

Addressing Concerns: Harassment by Recovery Agents

Understanding the Issue

Concerns about harassment often arise from aggressive communication tactics, frequent calls, and disrespectful behavior exhibited by some recovery agents. It is crucial to acknowledge these issues and work towards a more ethical and respectful approach.

Promoting Ethical Practices

Lending institutions and recovery agencies must prioritize ethical practices. Training programs and strict guidelines can ensure that recovery agents conduct their duties with professionalism, empathy, and respect, mitigating concerns related to harassment.

Also Read:https://www.loansettlement.com/blog/want-to-file-a-complaint-to-rbi-against-bank-recovery-agents/

Conclusion

In conclusion, the role of a recovery agent is multifaceted, encompassing responsibilities that contribute to financial rehabilitation. Addressing concerns related to harassment is paramount to maintaining trust and fostering positive outcomes. By emphasizing ethical practices, recovery agents can fulfill their responsibilities while promoting a culture of respect and cooperation in the pursuit of financial recovery.

Our team of experienced professionals can help you negotiate repayment plans with your lenders.

In addition to offering tailored advice and guidance, Loansettlement.com also provides access to financial education materials that can help you make informed decisions about your finances.

Whatever situation you are in, don’t hesitate to reach out for help with your loan payments.

We understand that everyone’s situation is unique, so we offer personalized advice and assistance that fits your specific needs.

With the right advice and assistance, you can get back on track and make progress toward becoming debt-free once again.

Register with us today at https://loansettlement.com/ to learn more about our services and how we can help you!

The post Addressing Harassment Concerns in Debt Recovery Practices appeared first on Loan Settlement.

In this extensive guide, we will explore the world of instant loans for bad credit, understanding their significance and mastering the art of negotiation to secure the best deals. Whether you’re seeking an instant loan to overcome a low CIBIL score or  looking for debt relief,  this blog aims to provide you with the knowledge and strategies essential for effectively navigating your financial challenges.

Understanding Instant Loans

Instant loans serve as a crucial financial lifeline for individuals facing urgent or unforeseen monetary challenges. Their defining features, including rapid approval and disbursement make them an attractive option for those in immediate need. Unlike traditional loans, instant loans boast a streamlined approval process, often requiring minimal paperwork and allowing borrowers to access funds within a short timeframe. The short-term nature of these loans, with repayment periods typically ranging from weeks to months, makes them ideal for addressing immediate expenses like medical bills or unexpected travel.

One of the key advantages of instant loans lies in their accessibility, especially for individuals with less-than-perfect credit histories. With fewer documentation requirements and no need for collateral, these loans offer a practical solution to those who may struggle to secure traditional financing. The online application process and electronic transactions further enhance convenience for borrowers, enabling them to apply from the comfort of their homes and receive funds swiftly.

While instant loans provide immediate financial relief, borrowers should exercise caution and fully comprehend the terms and conditions. It’s essential to use these loans judiciously, only in situations of genuine need, and to ensure timely repayment. Exploring alternative financial strategies and seeking advice can empower individuals to make well-informed decisions about their financial well-being.

The Importance of Negotiating Loan Terms

Negotiating the terms of an instant loan is not only about getting a better deal, but it’s also about ensuring that the loan aligns with your financial needs.  Lowering interest rates, even by a small margin, can lead to substantial savings over the life of a loan, particularly for extended commitments like mortgages. Beyond cost considerations, negotiation allows borrowers to customize their loan arrangements, tailoring repayment plans to ensure financial manageability. This flexibility extends to choosing loan amounts that precisely meet their needs and aligning repayment terms with income and financial goals. The transparent and clear terms resulting from negotiation reduce the risk of hidden fees or unexpected charges, fostering financial transparency.

Moreover, negotiating for favorable terms acts as a safeguard against debt traps, helping borrowers avoid the pitfalls of unmanageable repayment schedules. Responsible negotiation demonstrates financial prudence and can positively impact credit profiles, potentially leading to improved credit scores. The peace of mind derived from securing favorable loan terms contributes to reduced financial stress and anxiety. Beyond individual benefits, negotiated loan agreements provide legal protection for both parties, minimizing the risk of disputes. Ultimately, negotiation empowers borrowers economically, equipping them with essential skills to make informed financial decisions and advocate for their financial well-being, thereby avoiding unnecessary financial hardships.

Read also: https://www.loansettlement.com/blog/the-secret-to-getting-an-instant-loan-without-a-cibil-score/

Steps to Successful Negotiation

Thorough research forms the essential foundation for successful negotiation when seeking instant loans. Prior to engaging with any lender, it is crucial to conduct a comprehensive analysis of the market, gaining insights into the diverse lending options, terms, and prevailing interest rates. Armed with this information, borrowers can make well-informed decisions during negotiations, pinpointing competitive lenders and those more willing to accommodate individuals with less-than-perfect credit. Maintaining a positive and collaborative attitude is equally pivotal in negotiations. Approaching the process with respect and professionalism fosters goodwill with lenders, potentially resulting in more favorable terms.

Precise communication about financial needs and circumstances is paramount. Openly discussing income, expenses, and the specific need for the instant loan helps lenders tailor terms to individual requirements. Posing questions during negotiations ensures a thorough understanding of the loan agreement, preventing unforeseen surprises. Furthermore, it is imperative not to settle for the initial offer. Comparing offers from various lenders enables borrowers to pinpoint the most competitive terms, ensuring they secure not just a loan, but the best available loan for their unique circumstances. By adhering to these negotiation strategies, borrowers can navigate the instant loan landscape with confidence and secure terms aligned with their financial objectives.

Negotiation in Personal Loan Default

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Understand what a CIBIL Score is and how it affects your credit history 

Your credit history plays a critical role in determining your financial health. The CIBIL score is a three-digit numerical figure that determines your creditworthiness. Simply put, it is like a report card that tells a lender how well you manage your finances. A higher score implies that you are responsible in handling credit, whereas a poor score indicates otherwise. Your CIBIL score determines your eligibility for loans, credit cards, and other financial products. Therefore, it is crucial to understand the factors that contribute to your score and how you can maintain a good one.

Also Read Short Term Loans Without CIBIL: The Best Options For Bad Credit

Know the different types of Low CIBIL Score Credit Cards and what benefits they offer

A low CIBIL score can sometimes pose a challenge when it comes to getting a credit card or an instant loan for low CIBIL Score. However, certain credit card providers have come up with different types of low CIBIL score credit cards to help those with poor credit histories. These credit cards offer several benefits, including low annual fees, lower interest rates, and cashback rewards on purchases. Some low CIBIL score credit cards also come with special discounts on dining, shopping, and fuel purchases. Although the credit limits may be lower than standard credit cards, these types of credit cards are an excellent way to start rebuilding your credit score while enjoying the benefits that come with them.

Find the right card for you by thoroughly researching fees, interest rates, and other important factors 

While it may be tempting to choose the first credit card offer that comes your way, taking the time to thoroughly research fees, interest rates, and other important factors is crucial when it comes to finding the right card for you. After all, not all credit card offers are created equal. By examining the fine print and considering your spending habits and financial goals, you can find a card that will not only fit your needs, but also offer valuable rewards and benefits. So before signing on the dotted line, invest some time and effort into researching your options. Your wallet (and credit score) will thank you in the long run.

Stay organized by tracking all your transactions in one place 

Keeping track of all your financial transactions can be overwhelming, but with the right system in place, it can be a breeze. By tracking all of your transactions in one place, you can stay organized and make informed decisions about your money. Whether it’s a spreadsheet, a budgeting app, or a good old-fashioned ledger, finding a system that works for you will save time and headaches in the long run. Plus, having a clear understanding of your spending habits can help you identify areas where you can save and make smarter financial choices overall. Don’t let the fear of tracking your finances hold you back – take control and start tracking today.

Pay your bills on time to demonstrate responsible spending habits 

Paying your bills on time is not just important to avoid late fees or negative marks on your credit report, it also signals to lenders that you are a responsible spender. Demonstrating this behavior is crucial in establishing and maintaining a strong credit score. Being consistent with bill payments shows that you are capable of managing your finances and are trustworthy when it comes to loan repayments. Additionally, if you’re planning to apply for credit in the future, lenders will investigate your spending habits to decide if you’re a low-risk borrower. So, always make sure to pay your bills on time, as it’s not just good financial behavior, but a great way to prove yourself as a responsible spender.

Take advantage of rewards programs or cashback opportunities to make the most of your card

Credit cards can be a great tool for managing your finances and earning rewards. By taking advantage of rewards programs or cashback opportunities, you can earn points or cashback on purchases you make every day, like gas and groceries. These rewards can add up over time and could even help offset the cost of annual fees or interest charges. Plus, some credit card rewards programs offer special perks like discounted travel or exclusive access to events. So if you’re not already using your credit card’s rewards program or cashback offers, it might be worth exploring what options are available to you. Just be sure to pay off your balance in full each month to avoid any interest charges.

Rebuilding your credit with a Low CIBIL Score Credit Card can seem like an intimidating task, but it doesn’t have to be. With the right understanding and research, you can find the perfect card for you that fits your lifestyle while supporting your efforts to rebuild your credit. Establishing responsible spending habits is essential to rebuilding your credit, so track all of your transactions in one place and remember to pay bills on time. Finally, don’t forget to take advantage of any rewards programs or cashback opportunities available to make the most of your card. Taking these steps will put you on a path towards building a healthy financial future, and likely provide you with some added perks along the way!

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When looking for a debt settlement company, it’s important to consider the following factors:

– The company’s fees: Make sure you know how much the company will charge and what services they provide.

– The company’s reputation: Do your research and make sure you choose a reputable company with solid management team and a good track record.

– The company’s experience: Make sure the company has a lot of experience in debt settlement and knows how to negotiate with creditors.

– The company’s approach: Make sure the company has a plan that is right for you and your specific situation.

Loansettlement.com is led by experienced entrepreneurs who are alumni of IIT, IIM and MIT USA. They bring more than 30 years of entrepreneurial experience in varied domains – finance, consulting, online education and global careers management.

Our goal is to assist individuals in financial difficulties in getting out of debt. It’s widely acknowledged that if you default on your loan payments in India, recovery agents will pursue you and your life will become hellish, despite several Supreme Court rulings prohibiting the use of harsh measures during collection. We not only help you to negotiate settlement with the banks/ NBFCs but also put a stop to this kind of illegal harassment.

If you’re looking for a debt settlement company in India, please contact us today. We have significant expertise and we know how to get the best results for our clients.

For more information and to talk to our financial and legal advisors, register at loansettlement.com.

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• The complainant, Vibhu Bhakru, had taken a credit card from the Opposite Party, Standard Chartered Bank in 1999 and had been very regular and prompt at payments.
• On 24.02.2004 an invoice was sent to the complainant demanding payment of Rs.750/- charged on account of renewal. The complainant requested redemption on the points accumulated under the reward scheme by the bank against the renewal charges of which he was assured.
• The credit card duly expired in February 2004 but he was not issued the renewed card. He made several calls to customer care which were unhelpful.
• In May 2004, he was shocked by a telephonic call from an agent of the bank demanding payment of Rs. 28,000/-. Any explanation that he had not used the card after Jan 2004 had fallen on deaf ears after which he was visited by agents who demanded payment towards credit card usage.
• He filed another complaint with customer care but was again demanded payment of Rs. 28,000/-. After a dispute declaration by the Bank in March/April 2004, the complainant started receiving threatening calls. Despite several attempts to mediate the misunderstanding, he once again received a threat on 11.12.2004 for the collection of a levy of 20% on the outstanding if the payment was not made within 20 days.
• The bank claimed the complainant as frivolous who was filed with intentions of unjustly enriching himself at the expense of the OP Bank.

Judgement

The Commission imposed punitive damages of Rs.10 lacs deposited in favor of state consumer welfare fund and Rs.20, 000/- as compensation towards the complainant for trauma, mental agony, and harassment, loss of reputation and loss of creditworthiness.

Learnings from the case

Banks and financial institutions that provide loans and credit cards are not to resort to methods that have no legal back up. They are not to use abusive and threatening languages on the telephone and are most certainly not to visit the residence of consumers. They should keep a record of all the transactions between them and the customer and not demand unfair compensation.

The post Vibhu Bhakru v Standard Chartered Bank appeared first on Loan Settlement.

An important feature of credit cards is the option of paying minimum amount due. If any individual falls short of funds, they can pay the minimum amount offered on the credit card and avoid penalties. However, it is easy to fall into a debt trap if one uses this facility for a long time.

What is minimum amount due?

It is the minimum amount that a person is required to pay on or before the due date of payment to maintain the card account. Minimum amount due is usually calculated at 5% of the outstanding balance. Any unpaid amounts from previous bills also get added to the current minimum amount due. It also gets higher if the cardholder bought something on EMI through the card or spent more than the credit limit.

Most credit cards charge an interest rate of 3% per month which is equivalent to 36% annually. Banks keep levying interest on the outstanding amount left after the payment of the minimum amount. Since the interest rate is very high, most of the minimum amount paid goes towards interest charges and the outstanding amount is reduced marginally.

Let us take an example. Say an individual has an outstanding balance of Rs.50,000 and pays the minimum for each month- the minimum amounting to at least Rs.2000. In this case, it will take a minimum of 44 months for the entire outstanding amount to be paid in full, assuming that there are no more transactions done on the card.

Though the interest on the bill outstanding amount is not waived, minimum amount helps one avoid late payment fee which usually ranges between Rs.100- Rs.1000.

If an individual chooses to pay the minimum amount due, they do get temporary relief but a habit of paying minimum amount every month will result in the total bill multiplying quickly.

What happens if a person chooses not to pay the minimum amount?

A person choosing not to pay the minimum amount of due will be charged an additional fee, interest, and other charges. There may also a possibility of suspension of the card when the dues cross the credit limit. Not to mention that the effect on the creditworthiness and the credit score will make it harder to get loans in the future.

Paying the minimum is okay if it is for genuine reasons and used once in a while. Ideally one should not use more than 50% of their credit limit in a month as credit card spending usually comes with a risk of overspending and it is easy to fall int a debt trap.

Want to get out of debt trap? Register and talk to our counsellors for credit card settlement

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