A loan is the amount which you receive from the bank or financial institution in exchange for a commitment to repay the Principal amount along with interest amount. Common types of loan are Home Loans, Personal Loans, Car Loans, Business Loans, Education Loans etc.
Paying your loan EMIs on or before the due date is very important to get top up loans, enjoy other loan offers and many more other reasons. You can pay your Loan EMIs using any of the available online repayment modes. However, you also get an option to set up Auto Debit for repayment of your loan EMIs.
Auto Debt / Direct Debit is one of the safest and most convenient ways of paying your bills or monthly instalments. Payments are made automatically from your bank where there are no chances of connectivity problems, postal problems, or no late payment charges from the lender’s end.
Auto Debit is an instruction that you provide to your bank to allow the lender to deduct EMI on a specific due date of your loan. You need to sign on auto debit instruction or on NACH mandate. This mandate instructs your bank to allow auto debit of your EMIs by the lender. Once Auto Debit is approved by your bank, your monthly instalment will be directly deducted from your bank account chosen by you at the time of submitting loan application. You simply need to maintain the sufficient balance in your bank account at least 3 days before your EMI due date. Do check with your lender as well if your Auto Debit status is active before the first EMI due date. In case of any delays from your bank / lender to update the status, you will have to pay your first EMI online using any of the repayment modes. With this option, you do not need to worry about paying your EMIs every month and you do not miss your due dates which results an impact on your credit score.
Auto Debit of EMI can be setup by providing a Bank Mandate. This comes in the loan application stage where after submitting your personal, residential, and other details, you can download the mandate, sign, and upload a scan image for the mandate to be processed with your bank.
Here are the benefits of paying your bills via Auto Debit:
- Guaranteed Payments – Paying your bills / EMIs via Direct Debit comes with a guarantee. This also provides immediate money back guarantee in case of any payment error, Advance notification from your bank for amount due and the right to cancel the payment at any point of time.
- Saves money – When you make the payment using other repayment modes, you must pay some fee as per the payment channel. However, in case of Auto Debit, you don’t have to pay any fee to make your payment. Also, you are not charged late payment charges since there are delays in EMI payments.
- Peace of mind – Since your bills are paid automatically, they are never missed. This gives you complete peace of mind where you do not need to worry about due dates of your bills/ EMIs.
- Saves Time – When you opt for Direct Debit, you don’t have to go through any payment process. Hence this saves your time of paying your bills through online or offline repayment modes. This take away much of your hassle associated with paying bills using other modes.