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Loans are always an additional burden that one has to deal with. Loan should be taken only when you are sure that you will be able to pay it off in time. However, the future is unknown to all of us and when things change it either change for good or for bad. We borrow money with the hope to pay it off and also make enough effort towards that direction. Business loans are riskier for banks and hence they grant loans after doing a lot scrutiny. They verify the nature of business, the reason why loan is required and many other relevant factors that play a crucial role to determine if the borrower can pay the loan in a timely manner. Only after the lender is absolutely sure the loan gets sanctioned. There are instances when even after meticulous scrutiny some of the borrower defaults the payment. This certainly hurts the bank but at the same time it also hurts the defaulter in a much grave way.
In the construction sector, you just can’t get away without paying the lender especially when you have borrowed the money to buy heavy equipment. You may be doing well in your business and have lot of projects under your belt. Being so busy you might forget to pay the lender for the heavy equipment. If you forget that, it is still fine but you can’t miss the non-payment letters that you get from the bank. If you fail to pay them even after receiving letters from them, the lender will repossess the heavy equipment and they have every legal right to do so. They will try to reach you before taking this action but if you are on a business visit or are so entangled with your work that you do not pay any heed to them then it will be a cause of worry for you. The lender will get in touch with a repo company who will without letting you know about anything will drop in to your construction site and will tow the machine.
It will be very difficult to get it back from them. Nevertheless you have to pay the dues in full along with the penalty you may still have to go through a lot of hassle before you finally get it back. However if you still fail to pay them then the heavy equipment will be auctioned and it will have a new owner. This is definitely what you will not want to go through as it paints you in a negative light. Moreover your credit rating will go for a toss and you have to probably wait for years to get a loan to buy heavy equipment.
Getting a loan at a lower interest rate becomes extremely difficult for people who have earlier defaulted on loans. So if at all you come across a situation where you have defaulted and have now learnt a lesson from your mistake, the hard time will not pass so easily. No major lenders will be willing to fund you and if at all they do they will at a higher interest rate. This in no way sounds to be beneficial. Therefore keep a track of your loan payment schedules and do not miss a single payment.