What happens if an 18-year-old defaults on a two-wheeler loan?

If an 18-year-old defaults on a two-wheeler loan, the consequences can be significant and long-lasting. Below are the potential outcomes:

• Impact on Credit Score: Defaulting negatively affects the applicant's credit history, making it harder to secure loans in the future.
• Late Payment Penalties: Lenders impose late fees and additional charges for missed payments, increasing the overall debt.
• Loan Recovery Actions: Financial institutions may initiate recovery procedures, including reminders, legal notices, or engaging collection agencies.
• Vehicle Repossession: If payments remain overdue for an extended period, the lender may repossess the two-wheeler to recover the loan amount.
• Limited Financial Opportunities: A default at an early age can restrict access to credit cards, loans, and other financial products in the future.

Young applicants are advised to carefully assess their repayment capacity before taking a loan. In case of financial difficulties, timely communication with the lender can help negotiate alternative arrangements, such as restructuring the loan or adjusting the repayment schedule. Responsible financial management is essential to avoid the adverse effects of loan defaults.