Whether it's your credit card bills, mortgage payments, or utility dues, the punctuality of your payments can significantly impact your financial health. Picture it as the foundation upon which your financial future stands. A shaky foundation can jeopardise your future goals and dreams.
To help you prevent this, here, we discuss everything you need to know about timely payments, from understanding the serious repercussions of late payments to exploring effective strategies for staying on track.
To get the ball rolling, here is why you should ensure timely payments that pave the way to a stronger financial future:
1. Avoid Late Fees
One of the most significant reasons why you should ensure timely payments is to avoid attracting penalties or late fees. Most financial institutions levy a charge on late payments. This can unnecessarily add to your financial obligations, slowly bleeding your finances. Be sure to make timely payments to avoid having to pay late fees.
2. Avoid EMI Bounce Charges
Most financial institutions levy an EMI bounce charge if your account has inadequate funds for EMI payments. To avoid having to pay these, make sure to check your account a day before the EMI payment is scheduled and add the necessary amount if your account is running low. Doing this will help you steer clear of EMI bounce charges and EMI late fees.
3. Get Easy Loan Top Up
A loan top up is an additional credit that you can apply for over your existing loan. Making payments on time helps make your loan top up applications more favourable towards the lender as it serves as proof of your financial discipline and creditworthiness.
4. Maintain a Good Credit Score
If you’re wondering how to maintain a good credit rating, the answer is ensuring all your debt obligations, such as EMI payments, bills, etc., are paid on time. Your credit score is an indicator of your creditworthiness and a crucial factor for financial institutions when judging your loan applications.
And so, apart from avoiding late fees, timely payments also help you ensure your future loan applications are viewed favourably.
5. Build Trust with Lender Leading to Better Offers
Making your payments on time showcases financial responsibility and a capacity to manage your finances efficiently. This helps convince lenders of your creditworthiness and ability to meet EMI obligations without default. Further, it also gives you better negotiating power to gain improved loan terms and better offers.
6. Benefit from Interest Savings
Most loans calculate interest on a daily basis. Paying on time reduces the outstanding balance immediately. As a result, this reduces the interest charged over the loan tenure. This way, you pay only the basic interest on your loan.
7. Gain Peace of Mind
When you make your payments on time and avoid penalties such as EMI overdue charges, EMI bounce charges, EMI late fees, EMI late payment charges, etc., learn how to maintain CIBIL score, or how to maintain credit score, your financial worries reduce, helping you live a more stress-free life and gain peace of mind.
Tips to Ensure Timely Payments
Now that you know what happens if EMI is not paid on time, or timely payments are missed, let’s discuss how you can prevent this. Here are tips that will help you ensure you stay on track with your payments and don’t attract penalties:
1. Automate Payment With E-Mandates: Set up e-mandates for recurring payments. You can instruct your financial institution to make periodic payments automatically, helping you ensure you never get late on your payments. With this, you no longer have to wonder- what if EMI is not paid on time, as the EMI is debited automatically each month.
2. Set up Payment Reminders: Consider utilising technology to help remind you of upcoming payments. Today, apps such as calendars, personal finance apps, etc, offer a reminder feature that notifies you every time a payment is due.
3. Prioritise High-Interest Debt: For those who have multiple debts, prioritising the payment of those charging the highest interest is key. Reducing such debts can help you save money you might otherwise have to pay as late fees.
4. Plan your Budget: Planning ahead and establishing a budget beforehand can help you ensure you always have sufficient funds for timely payments. Not only that, but it also gives you a clear view of your spending habits. Make sure to consider your income, saving goals and expenses when creating your budget.
5. Leverage Bill Pay Services: Many financial institutions today offer bill pay services specially designed to help you pay your bills on time. By engaging these services, you can ensure necessary funds are debited directly from your bank account as per schedule and also have a concise record of all your payments.
6. Review Your Credit Report Periodically: If you often wonder how to maintain good CIBIL score, or how to keep a good credit score, inculcating this habit is sure to help you. Reviewing your credit report from time to time allows you to ensure your payments are being reported accurately. This exercise gives you an opportunity to report any errors or discrepancies in time, protecting your credit history and CIBIL score.
7. Communicate with Your Financial Institution: In case you anticipate a hurdle in making payments to your financial institution, be sure to communicate the same to them. You can discuss alternative payment plans or temporary adjustments to overcome this.
8. Avoid Over-Committing Yourself: It’s best to be mindful of your current financial capabilities when considering taking on debt. Doing this will help you ensure you don’t overextend your finances and strain yourself to meet future financial obligations.
Final Thoughts
Ensuring timely payments is a small step that helps you stay on track towards a strong and stable financial future. As discussed above, failing to honour these payments, however minor, can ultimately lead to high financial costs and reduced financial freedom.
Fortunately, you can apply some quick and easy strategies to ensure your financial future shines bright and you move closer to your financial goals each day.
What’s more, if you’re looking for a reliable partner in your financial journey, you can turn to Tata Capital. Not only do we offer a wide variety of attractive financial offerings, but we also ensure our customers feel supported every step of their financial journey. To learn more about our services, visit the Tata Capital website or download the Tata Capital App today!
28 May 2024
6 mins read
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