What To Do When I Can’t Repay My Personal Loan?

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I know you’re panicked. You’re thinking this is the end of the world, the banks will sue you, and you will be put behind the bars. But hey, don’t panic. This is certainly not the end of the world, and you’re going to pull through this situation. Defaulting of personal loans in India is a common practice. Some default it at the national level and some at the local level. To ease your situation, Nick Woodman founder of GoPro flunked $3.9 million of investors before even starting GoPro. He didn’t panic because he knew a way out and how to repay the money. Likewise, don’t let yourself in panic and fear. There’s a way out. 
Sit back, relax, breathe and read along to find out what you can do to overcome the struggle. 

Pick up the lender’s phone call

Whether it’s your 3rd default on repayment or the very 1st, not picking up the phone of the lender will be of no use. You’ve given your address proof, and they can legally visit your door at any time or arrange for things that will ensure your presence before them. If you cannot repay your loan due to reasons like job loss, met with a medical emergency that required you to pay for that first or your house burnt, and that requires attention and money. Then banks will consider your situation and will ask you to work out a plan before them that will ensure the repayment of the loan, and if they find it reasonable, then you have the bank’s approval.

Talk about changing the EMI plans

When you have just met with uncalled events, and due to it, you couldn’t repay the loan EMIs. Talk with the banks to change the EMI plan that will be easier for you to pay as you may have other bills to pay. Talking to the loan representatives has proven to be helpful in many cases, simply thinking that lenders are evil, and they only bother about the money is a wrong notion. The lenders are here to help us and not to ruin our lives. After all its India and people are good at heart. Even the RBI has banned the use of muscle power to recover the debt. 

What if you don’t have any mean to repay the loan? What should you do then?

I know situations can go to extremes when they want to. But if its night now, the sun is about to shine, just hold your horses and stay put. Now, what can you do? Well, let’s breakdown the problem into smaller bits, finding out a solution gets easier. 

The problem breakdown

Let’s breakdown the problem to find the solution. Let me remind you, it’s a step that involves talking to yourself. So, don’t think you’re a sick person, it’s completely normal. Ask yourself the following questions to breakdown the problem. 
“What’s my loan balance?”
“How much is my monthly EMI after the penalty?”
“What resources do I have to repay the loan?”
“What extra measures can I take to repay the loan?”
“Should I get another job or start selling things to ease the situation?”
Asking yourself such questions will give you the answers to your problem. Instead of panicking and hiding, brainstorm on the ways that can get you out of the situation.

Sell your vehicle if you can

Repaying the loan is a priority right now. You can buy another vehicle if you get out of debt but keeping your vehicle safe will only cost you as its value depletes year-on-year. Selling the vehicle will only ease out your situation as it contributes some to the repayment of the loan. 

Look for gold that you can use to repay

Gold is an investment for the tougher days. History is the proof; gold has been used by many rulers to overcome tough situations. After all, you purchased that gold as an investment and an emergency fund. Calculate it’s worth and see how much it covers your loan. If it covers entirely then amazing, if not keep searching for ways that will help you.

Borrowing from relatives

You can approach your relatives in such situations. I am sure they’ll be able to help you. Don’t pressure them if they’re not able to. Collecting funds from them could help in coming out of the situation.

Get multiple income streams

When you have more than one income streams, if one fails, you still have other income streams to back you up. Try to get another job or look for online ways that help you generate passive income.


Take help of money-making applications

Apps like “Meesho” can help you sell things on social media and earn income. Look for other such apps and get on it without wasting a single second. Money can solve your problem, thus find out ways to earn more money. 


To secure your future, you need funds. So, start building up your emergency fund and minimize your expenditure. The entire idea is about becoming financially independent so that situations like these can be tackled without putting ourselves into misery.