Missed Personal Loan EMI? What Will Be the Consequences

Availing of a Personal Loan has become easier than ever before. Financial institutions make it easy for borrowers to avail of a loan to meet their various financial requirements. Not just this, some of the top banks and NBFCs (Non-Banking Financial Companies) even offer an instant Personal Loan with a low CIBIL score, provided the borrowers meet their other eligibility criteria.

As a result, millions of people have taken Personal Loans from their preferred lenders. The one major setback of easy loan availability is that some borrowers fail to consider all the financial implications of loans.

While availing of the loan is easy, paying it back at the right time becomes challenging for many borrowers. There may be some unforeseen situations in life where one’s finances are strained. An illness of the primary breadwinner, loss of job, unexpected expenses, etc. are some examples. All such things could take a toll on EMI payments.

Despite choosing a comfortable loan repayment and EMI, some borrowers find it difficult to repay their loan EMIs on time during a financial crisis. As a result, they miss out on their EMIs.

Now, you may wonder: What happens if I don’t pay my Personal Loan EMIs on time?

What are the consequences of missing multiple loan EMIs?

To know the answer to these questions, read this article further.

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Classification of Loan Defaults

Most lenders classify loan payment defaults into two categories, and they are as follows:

●       Major Defaults

Major loan defaults are those when the borrower has not made the loan EMI payment for more than 90 days after the due date. It incurs huge penalties. Also, most lenders avoid lending to individuals who have major defaults in their credit reports. When an individual has loan payments pending for more than 90 days, the loan account is marked under the NPA (Non-Performing Assets) group.

●       Minor Defaults

Minor payment defaults are those loan accounts when the non-payment is less than 90 days past the due date. This type of payment default incurs minor consequences. Also, borrowers who have minor defaults against their loan account can recover from the negative impact that it has on their CIBIL score if they take the right action timely.

What Happens If You Miss a Personal Loan EMI?

Let’s take a look at the consequences of missing loan EMI payments:

●       Low CIBIL Score

The most obvious impact of defaulting on loan payments is a decrease in your CIBIL score. Missing even one EMI payment can lead to a drop in the CIBIL score by 50-70 points. Most lenders require a good CIBIL score of 750 and above to apply for a loan. Hence, getting a Personal Loan Online with a low CIBIL score will be very difficult.

●       Questionable Creditworthiness

An individual’s CIBIL score shows their repayment history and even single repayment default will reflect in the borrower’s credit report. This makes it difficult for them to borrow in the future and questions their creditworthiness. They become risky borrowers for lending institutions and are considered to have high chances of defaulting on loan repayments.

●       Late Payment Penalties

Most lenders levy a penalty for people who have missed their EMI payments. This can either be in the form of late payment charges or a higher interest rate for the EMI. Late payment charges vary from one lender to another but are usually around 1-2% of the EMI.

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●       Harassment by Recovery Agents

This may not happen right away but sometimes lenders send agents as their last resort to recover the loan amount. It mostly happens when the borrower has defaulted for more than 90 days which is categorized as a major defaulter. Banks and financial institutions initially issue a 60-day notice to the borrower before tagging the loan account as a Non-Performing Asset. This is a situation that is best avoided otherwise it can be very stressful.


With the easy availability of Personal Loans, it may be tempting to opt for one. However, before you apply for it, make sure you evaluate your financial situation carefully and decide whether you will be able to afford it. For this, you can also use an online Personal Loan eligibility calculator that informs you about the loan amount you can borrow as per your eligibility. And choose the loan amount as much as you can comfortably repay on time because missing even one loan EMI leads to several negative consequences.

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