As the financial year draws to a close, many borrowers face a familiar problem: struggling to make EMI payments and risking loan defaults. Recent data indicates that defaults on retail loans, particularly unsecured personal loans, are on the rise. Small-ticket personal loans—under Rs 10,000 — show higher delinquency rates than larger loans. But the good news is that technology and smart financial planning can help borrowers navigate these challenges before they escalate into defaults.
Practical Strategies to Stay on Track
1. Restructure Payments Before It’s Too Late
If you’re facing a short-term cash crunch, consider restructuring your EMIs. Many lenders today offer options like step-up EMIs, tenure extensions, and even temporary moratoriums. The key is to engage with your lender early—before you miss a payment and damage your credit score.
2. Use AI for Smarter Financial Decisions
Today’s fintech landscape offers AI-powered financial management tools that can track spending, predict financial shortfalls, and even suggest corrective actions. At Credgenics, we’ve observed that early intervention—driven by AI insights—can reduce delinquency rates by up to 30%. For borrowers, this means access to smarter, data-driven financial planning before a crisis hits.
3. Consolidate Debt to Simplify Repayments
Managing multiple loans with varying interest rates and due dates can be overwhelming. A debt consolidation loan allows borrowers to roll multiple loans into a single, lower-interest loan, making repayment more manageable and reducing overall interest costs. Banks and NBFCs now offer refinancing options that can improve cash flow and reduce financial strain.
4. Automate Payments and Eliminate Wasteful Spending
Setting up auto-debit for your EMIs ensures you never miss a payment. Meanwhile, a close look at discretionary expenses—streaming subscriptions, frequent takeout orders, or luxury purchases—can help free up funds to meet financial commitments. The goal is to create a buffer that keeps your payments on track.
The Bigger Picture: A Smarter Approach to Debt Management
The role of technology in financial management is more crucial than ever. With the right tools and a proactive mindset, borrowers can avoid defaults and build long-term financial stability. As we approach the end of this financial year, the focus should be on damage control and on laying the groundwork for a stronger financial future.
The author is co-founder and CEO, Credgenics.
(Views expressed by the expert are his/her own.)