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Responsible Borrowing & Legal Implications to Consider

  • Reminder 1: We at SiFinances promote and adhere to a policy of ‘Borrowing Responsibly and Accountable Use of Loans’
  • Reminder 2: Approval of loans is not guaranteed. Loans are costly financial products and it is recommended to use them carefully.

It is vital for all borrowers of any kind of loan to thoroughly read and understand the Terms and Conditions before they sign on the dotted line and submit the loan agreement. This agreement has information about the exact date on which the loan needs to be paid back by you. In case you fail to repay the borrowed loan on time, then the lender has all the rights to levy varied charges, including late fees, till the entire debt owed by you is repaid to the lender.

Irresponsible borrowing can cause numerous problems, as discussed below.

Please read through it Example of an APR (Annual Percentage Rate) range

There are numerous variables that play a role in determining the rate of interest that borrowers will need to pay for loans. The APR varies as per the location and the credit score of the borrower as well as the qualification requirements of the lender. On average the rate will fall between 200% and 1386% for cash advance loans, and 6.63% to 225% for installment loans.

People with bad or average credit score may have to pay an increased APR as compared to individuals with good credit scores. It may however be noted that the determination of the APR (low or high) is entirely dependent on the lender. All those who seek to avail of a loan have to know that the APR is perennially high.

Consequences of Late Payment

Borrowers who fail to repay the loan on time and without delay are liable to being charged late fees. The amount of late fees varies between different lenders, but it generally tends to be very high. Additionally, there is buildup of fees each and every day till the entire loan amount plus additional charges are repaid in full. It is therefore important for borrowers to inculcate and maintain the habit of repaying their loans on time, on the due date, so as to avoid getting charged any extra charges and fees. Borrowers also need to remember that late payment may also negatively impact their overall credit.

Non-Payment of Loans and its Financial Ramifications

Non-payment or failure to repay the loan taken out by a borrower can result in many financial ramifications, including multiple charges and fees being levied upon the borrower till he/she repays the loan. Borrowers who do not repay the loan amount will remain indebted.

The Rules and Procedures of Debt Collection

The laws pertaining to debt collection procedures and practices differ as per the location of the borrower. Most sellers do not engage in sale of a borrower’s debt to collection agencies situated outside the borrower’s location. Lenders and collection agencies generally try to collect the loan debt via communications like phone calls, text messages, and/or emails. It is however important for borrowers to verify the terms and conditions of the lender for more information about the lender’s collection practices.

Effect on the Credit History

When borrowers do not repay the entire loan amount, then it is most definitely going to have a negative impact on their credit score and credit history. The lender has all the rights to report non-payment of loan debt to any one or even all of the key credit report bureaus.