Monexo encourages responsible borrowing23 March, 2017
Monexo encourages borrowers to pay their monthly installments on time which is due on 1st of the month. We proactively send them email reminders before the payment due date. However, if they are unable to make payment on the 1st of the month, they have a grace period of repaying by 4th of the month
So, what happens in case of delay or default of payment?
1. Late fees and penal interest
If the payment is not made into the escrow account latest by the 4th of the month, borrowers will be charged a late fee and overdue interest rate until the EMI and the late fee are paid.
2. Legal action
Borrowers are legally obliged to pay back the loan. Any cheque bounce or NACH bounce is a criminal offence as per Section 138 of Negotiable Instruments Act. Suitable legal proceedings will be initiated for bounce cases and for recovery of dues.
3. Action by Collection Agency
If a borrower’s dues are not received on time, their loan will be referred to an accredited collection agency. The collection agency will adopt collection procedures as per statutory guidelines. This could lead to embarrassment in front of their colleagues, family & neighbourhood which can be easily avoided.
4. Reporting to the credit bureaus
We report monthly repayments by borrowers to the credit bureaus such as CIBIL and CRIF Highmark. Their credit repayment record forms part of the credit report which is available to banks and NBFCs to decide whether to lend them money. With regular repayments, they will be able to have a better credit score.
5. Delays or defaults leads to no new loans for a long time
Any delays and default of repayments is going to adversely affect borrower’s credit score. A report that shows late payments might lower their chances of getting a loan in the future or require them to pay a higher interest rate for a loan.
6. Borrower’s identity disclosed to lenders
We keep borrower’s identity anonymous in our P2P lending marketplace. Lenders can not have their name and personal contact details when a loan is disbursed to them. However, in the event of a default, we will reveal their identity with all the lenders.
Monexo believes in being transparent and educating its customers in building responsible credit behaviour. Borrowers are advised not to over-borrow beyond their repayment capacity. We encourage them to practice sound money management that enables them to meet their loan obligations on time.