There would not be a single person who would want to have financial stress in life. It is rightly stated to be the worst stress of life that can take the steam out of the boldest of individuals. And when one faces financial issues, defaulting on the loans is quite like. Can someone predict him inching close to strain related to funds and take corrective actions? The answer to this is yes. The following are five indicators that can indicate the possibility of your name getting into the loan defaulter list.
- Using a credit card to available limit and paying on minimum amount due Credit card usage can be the starkest sign to indicate financial strains. In case your utilization of a credit card is maxing out to the total limit then it may turn out to be a cause of concern. Especially in the case; where you are thinking of paying the minimum about due rather than clearing a larger portion of the outstanding. All of us know the credit card debt is the most expensive debt where the effective rate of interest can actually be high as about 50% interest. And despite having this knowledge you deciding to pay the minimum is a clear indication of you heading towards a stressed financial life.
- Your cumulative debt EMI is greater than half of your monthly income In case your obligation on repayment of the loan every month has slowly turned out to be greater than 50% of your net monthly income, please be aware that it is a clear sign of issues on the money front. The repayment may just not factor the personal loan or any other loan EMIs or credit card outstanding but even any advance from the employer and or a loan taken from a relative for any purpose. At the end of the day, even these form part of the debt that you need to pay. People in general miss out on including these when calculating total obligations.
- You have to borrow money from friends to pay on due date One has to live within means is what is an age-old saying. In case you are in a situation where you have to borrow money from friends or folks to pay the EMIs on the due date (since you do not wish to default) it could be an early sign of you heading towards default. In such a situation it will become apply important for you to manage your finances and ensure that this is a one-time borrowing only and there is no repeat of this situation.
- You decide to take a loan at a high rate of interest You may find it difficult to accept but if you are ready to accept unfavorable loan terms, it may be an indicator towards you heading towards default. All lenders would want to acquire a customer who would qualify on the underwriting parameters and is deemed to be low on the risk of going delinquent. In case the lender is asking for a higher rate of interest than it would usually charge it only highlights that your loan is judged to be high on risk. Your loan request has got rejected In the event of your loan is getting rejected, please be aware that it is a situation of grave concern. Goes without saying that it is worse off than a lender giving a loan at a higher rate of interest. In this event, your name might already be part of the loan defaulter list that cannot be ruled out.
If any of the above signs are identified then you seriously need to work upon the finances. It is better to curtail expenses and limit these to the basic essential ones only.