Here’s why you shouldn’t miss repaying even a single EMI on a personal loan

Here’s why you shouldn’t miss repaying even a single EMI on a personal loan 

No matter your circumstances, there is no justifiable excuse to miss a personal loan EMI payment. Not ever! A personal loan is a serious obligation. It is approved not on a tangible asset but rather on an individual’s capability as manifested by their credit rating. The lender is looking to safeguard their loan, especially when it is a personal loan. There are severe penalties and consequences associated with missing an EMI for a personal loan. Some of the more serious ones are listed below. 

Lower credit score and credit report

To avail of a personal loan, an individual must possess a credit score of 750 or above. If even one EMI payment is missed on the loan, a significant 50-70 points can affect the credit score. Even if one makes it up the next month or so and happens to enhance their credit score again, it will be a permanent feature of their credit report, which can have repercussions on future transactions. 

Miss a payment and pay much more 

To ensure that EMI payments are made on time, most lending institutions levy a penalty on the missed payment amounting to 1%-2% of the amount of the lapsed payment. This is a cumulative sum. And though it may not seem much, it really can add up to an amount that requires a serious financial overhaul on your part over time. 

Borrowing in the future becomes an issue

As we saw, failure to pay an EMI for a personal loan affects your credit score and besmirches your credit report. It is a serious red flag for any future lenders to whom you may apply for a loan. Even one missed payment of an EMI in the past is enough for your loan application to be rejected. Considering that one takes a loan only when it’s needed, why jeopardise that possibility in the future by failing a payment today?

Bye-bye collateral

Missing a payment on a loan is an open invitation for the lender to recover that amount from any collateral you may have pledged. After all, this is the entire reason for pledging collateral. It may seem a touch callous, but since this is the surest and easiest way for a lender to recover their investment, why won’t they?

Unending legal hassles 

In extreme cases (such as non-payment for 90 days), you may be slapped with serious legal ramifications for your oversight. This can ensure that you waste 5-10 years of your life trying to untangle the legal mess of your creation in India. 

Last words

There is no excuse for missing an EMI payment on a personal loan, as the five points above make amply clear. It is not the most difficult thing in the world to be alert. A little planning and some self-control are all that is required, so look sharp if you have availed of a personal loan! Please recheck you monthly EMI Installments with Personal Loan EMI Calculator, also for an online personal loan application process, you can use some of the best lending apps, such as the IDFC FIRST Bank’s Mobile Banking App.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.