Sure, you’ve chosen your instant personal loan after thorough research and preparation. However, in life, one ought to expect the unexpected. There are chances that you may find yourself struggling to pay a particular month or months’ EMIs. Though defaulting on a few EMI payments on your personal loan may not seem to be that big of a deal, it certainly has consequences attached.

Read more to find out what exactly you can expect on missing out on personal loan EMI payments.

What Can You Expect on Missing Personal Loan EMI Payments?

Defaulting on your personal loan EMIs can have both minor and significant repercussions, as discussed below –

– Fees for delayed payments 

One of the primary and short-term personal loan default consequences is late payment fees or charges, something which all lenders charge as a percentage of the personal loan EMI amount. For a month or two of defaulting, the penalty charges may seem insignificant. However, if the same keeps piling up, the late payment fees may be considerably high.

– Grim chances of refinancing 

Consistently missing out on your personal loan EMI payments will minimise your chances of loan refinancing. This will shut the door on availing the benefits of lower personal loan interest rates in the future. Lenders will consider you to be a high-risk borrower and hesitate to take up your request for a loan transfer.

– Low CIBIL score 

As crucial as your CIBIL score is in determining your personal loan eligibility, it is equally important in determining your future eligibility for credit. A high CIBIL score gives you access to more finance options and higher loan amounts. Defaulting, even on a single EMI payment of your personal loan can severely affect your CIBIL score, impacting future credit-worthiness.

– Legal implications 

As a last resort, lenders may take legal action against the defaulter. This is especially true of those who have skipped their personal loan EMI payments for over 90 days. First, the lender could have recovery agents sent to your home to recover the personal loan amount via collateral. After multiple such attempts, the final option left to retrieve the personal loan default amount may be to file a civil suit against you. Such a situation can prove to be extremely stressful. Hence, it is essential to ensure that you never miss out on an EMI payment of your personal loan.

Responsible Borrowing: A must 

The consequences mentioned above will help you reconsider your personal loan default. The best way to avoid defaulting is to borrow responsibly. Responsible borrowing means evaluating your budget before you apply for personal loan and determining if your EMI comfortably fits into it. For this, you can use tools such as a personal loan EMI calculator. As an additional tip, compare between lenders to opt for one that offers lower personal loan interest rates.

The bottom line is to apply for your personal loan online after you’re convinced of its affordability.

In association with Tata Capital