Missed Your Loan EMI Payment? Know the Consequences and How to Handle It
In today’s fast-paced financial world, it's easy to lose track of loan repayment dates. But missing an EMI (Equated Monthly Instalment) can have serious implications, especially for your credit profile. Whether it’s due to insufficient funds, an emergency, or oversight, one missed payment can snowball into larger issues. This article by Vizzve Finance explains what happens if you miss an EMI, how to recover from it, and how to prevent such situations in the future.
What is an EMI?
EMI, or Equated Monthly Instalment, is the fixed amount a borrower pays every month towards loan repayment. It includes both principal and interest, and timely EMI payment ensures the loan tenure is followed without penalties.
Consequences of Missing a Loan EMI
1. Late Payment Penalty
Banks or NBFCs impose a late fee if your EMI is not paid on time. This can range from ₹500 to ₹1,000 or a percentage of the EMI depending on the lender.
2. Negative Impact on Credit Score
Missing even one EMI can reduce your credit score by 50–100 points, which affects your chances of getting loans or credit cards in the future.
3. Higher Interest Costs
If you miss an EMI, interest continues to accrue on the unpaid amount, increasing the total cost of your loan over time.
4. Legal Notices
In case of repeated defaults, lenders may send legal notices, initiate recovery proceedings, or even repossess assets in secured loans like car loans or home loans.
5. Loan Restructuring Limitations
Missing EMIs can reduce your credibility, making it harder to negotiate loan restructuring or get moratoriums in the future.
What to Do If You Miss an EMI
Make the Payment Immediately
As soon as you realize you’ve missed an EMI, pay it along with the penalty to minimize damage.
Inform Your Lender
Reach out to your bank or NBFC. Some lenders allow a grace period or offer flexible repayment options.
Request for EMI Postponement or Restructuring
If facing a genuine financial crisis, request for a restructuring of the loan, which may involve reducing EMIs or extending tenure.
Automate Payments
Use auto-debit facilities from your bank account to avoid future defaults.
Monitor Your Credit Report
Check your credit report regularly to ensure that missed payments are updated once cleared.
How to Avoid Missing EMIs in the Future
Set payment reminders on your phone or calendar.
Maintain an emergency fund to cover EMI dues during crises.
Choose EMIs that are within your affordability limit.
Opt for a loan tenure that allows for manageable EMI amounts.
Always ensure your bank account has sufficient balance on the due date.
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Frequently Asked Questions (FAQs)
Q1. Will one missed EMI affect my credit score?
Yes, even a single missed EMI can negatively affect your credit score, especially if not paid within 30 days.
Q2. What happens if I miss two or more consecutive EMIs?
Multiple defaults increase penalties, impact your creditworthiness, and may trigger legal action from the lender.
Q3. Can I get a loan after missing an EMI?
Yes, but your chances of approval may reduce depending on how recently and frequently you missed EMIs.
Q4. What is the grace period for EMI payments?
Many lenders offer a grace period of 3 to 15 days. Check with your lender for specific policies.
Q5. Can I postpone my EMI legally?
Yes, you can request a deferral or restructuring with prior approval from your lender.
Published on : 2nd August
Published by : Selvi
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