Let’s assume you got some spare cash and transferred it to your lender’s bank account directly. Your idea was to reduce some amount of the loan that you took earlier. However, you see that the outstanding amount of the app remains the same even after several weeks. In fact, the interest is also calculated on the same principal and there is no trace of the payment you made to the lender. However, this situation has nothing to do with fraud or band intent. It happened because of a direct transfer which is not the same as a part-payment.
Loan Accounts and Bank Accounts Are Not the Same!
As soon as the bank receives the amount you sent, the first thing it checks is the sender details, including the numbers. In most cases, it is not able to see what the amount was credited for because the system needs to take care of several other loan accounts.
All lenders run their systems based on specific identifiers, such as your personal loan account number or a virtual payment address that is unique in most cases. They may also be functioning based on the auto-debit mandate that you may have signed up for when availing of the loan.
A plain transfer that you made will generally land as unidentified credit, especially if you did not leave any clue in the remarks section too.
What If It’s Not the Correct Account?
Most digital lending apps work with a lending partner that can be either a bank or a non-banking financial company (NBFC). That also means that the actual loan that you got was sent by this entity instead of the lending app. Their accounts will be different and the UPI payment you just made was not even the account that was supposed to be.
In what can be called a worst case scenario, you may have transferred the money to an account that does not count under the lending partner. In another case, it may belong to a recovery agent who has nothing to do with the other transactions of the financial institution.
That is why it is often not counted as part-payment and is not included in your loan statement.
Does Part-payment Have a Defined Process?
Most loan agreements will never consider any extra money you pay as a part-payment. This happens by default because they have a defined process for any partial payments that you may want to make for your personal loan or other debts.
In most cases, part-payments are initiated by the lending app or the lender directly. That means it carries its own request form and may attract prepayment penalties based on the specific loan type.
In other cases, lenders may process part-payments only on specified dates, such as the due date for your EMI, or a designated cut-off day for every month.
This is generally done to ensure the interest rate is calculated correctly without any interference.
That is why any direct transfer made outside this process is not counted as a part-payment by the lender.
Timing and Reconciliation: Another Gap to Consider
Automated repayment systems often reconcile payments through specific categories, such as NACH debits or the lender’s payment gateway. Most of these are part of a specific schedule that doesn’t change just because you made a direct transfer in the middle of the month or year.
A transfer that you made through UPI payment, NEFT, or IMPS, must be matched manually by someone from the lender’s team,
The manual step can take many days to complete, which makes way for certain gaps that lead to accrued interest as a part of the loan’s outstanding balance.
In some cases, the lender may send back the money to your account to avoid any further discrepancies.
How to Make Sure Your Payment Counts?
The best way to make a part payment is by using the lender’s app or official payment page. In most cases, a better alternative is to note down the official bank account number of the institution or app and transfer the money directly to the same. You may also inform the lender beforehand about the money transfer by email, so that they can note down the transactions in the upcoming statement.
This helps if you consider direct transfer as the only option for your payments. Also, do not forget to ask the lender to confirm the payment in writing, which will be an alibi for you in the future.
A Simple Lesson to Learn from Direct Transfers
A part-payment works well only if you transfer the money to the right account of the lender. That means their system must be able to recognize and acknowledge the direct transfer clearly. Your amount will never be counted in the loan balance if you transfer it to the wrong account or skip adding a reference number in the remarks section. The best thing to do is to confirm the correct channel before making the transfer, and get written acknowledgement from the lending app or partner once that is done.