Loans are very helpful and allow you to meet financial goals at an early stage in life. There are certain goals which you have to postpone for some time, if you don't avail a loan. For instance, if you are a salaried person and would like to buy a car without availing a loan, then you will have to save money for some years and then buy the car. But, if you avail a car loan, you can fulfill the dream of buying the car quickly.
Just like a car loan, there are many loans which help to meet your financial goals.
Now the question arises on how the loans are repaid? It’s quite simple. Loans are repaid in EMI's. Borrowers have to repay the loan amount in EMI's. Loan EMI's paid by the borrowers include both principal and interest. In this blog, we will discuss a story where borrowers were cheated by a bank manager while repaying their loans to the bank.
Hundreds of customers of IndusInd Bank in Jagatsinghpur were cheated by the bank manager, while repaying their two-wheeler loans. This bank offers two-wheeler loans to eligible customers, where they can avail loans up to 90% of the product value and repay in 36 monthly installments. As it was very helpful to buy two-wheelers, many people availed this loan and started repaying their loan in installments each month.
Even though customers were paying their installments on time, they started receiving notices from banks for non-payment of EMIs. After receiving the notices, they got to know that installments paid by them were not deposited in the loan account. So, they contacted the bank and brought this to the notice of the hub manager. After conducting an inquiry, it was found out that the manager of the branch had misappropriated the amount. The manager used to receive installments from the customers by giving them handwritten receipts and never deposited the amount to the bank.
So, it is very important to pay the loan EMI in the proper mode to avoid getting cheated. If the loan EMI is not deposited to your loan account at the proper time, your credit score will be impacted.
1. Standing Instruction
Standing instructions are a way of making an automatic payment of a fixed amount from your savings bank account to a lender at the same time each month. Under this process, there is no hassle of making a payment manually each month. You must mention the date on which amount must be deposited to your loan account. You must ensure that the account has enough money when the bank tries to withdraw the EMIs. This mode of EMI payment ensures you don't miss any payments.
2. Post-Dated Cheques
Post-dated cheques equaling the loan amount are given by the borrowers for a future date. These cheques can either be cashed or deposited on the date specified on the cheque. It is a traditional way of making payments.
3. Electronic Clearing Service (ECS)
This mode is just like a standing instruction where the borrower of the loan, will give the bank access to take the EMI from his/her account. This is used when the borrower doesn't have an account at the lender bank. The lender bank will provide a signed approval form and cancelled cheques to the borrower's banker who will approve the transaction of the EMI from borrowers account.
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