Missed your Personal Loan EMI this Month Consequences to faceSometimes the financial requirement is unavoidable and there is no option left except to take loans. Taking a personal loan is now easy thanks to the digital loan apps and credit websites. But what is important after you a take a loan? Repayment of EMIs on time every month is critical. Frequency of delayed or missed EMIs can have consequences for the borrowers in form of fines and penalties for late payments.
Here are some consequences that borrowersmay have to confront, if monthly EMIs are missed frequently:
- Decrease in your credit score- Missing even one month EMI payment can drop your credit score as much as 100 points*. With low credit history,it becomes difficult to obtain loans in future. Most lenders do not sanction the loan application of the applicants with major defaults in their credit history. So it becomes significant that you don’t miss outeven a single EMI schedule.
- Extra charges & penalties- Several lenders may levy extra charges and late payment penalties when a borrower misses paying an EMI on time. The penalty charged is generally around 1-2%of your EMI if it remains unpaid for 30 days after the due date. You will be liable to pay the missed EMI along with the extra charges plus the next month’s EMI in the next cycle.
- Pestering by recovery agents- Most of the lenders appoint recovery agents who keep calling the borrowers to recover the EMI. If you don’t answer their calls, financial companies send the recovery agents to visit the borrower’s residence or workplace. The work of the recovery agent is to collect the dues from the borrower. This can lead to an embarrassing situation for the personal loan borrower.
- Lowers future loan ability- With even a single missed EMI payment, the chances to procure loans in the future may be dimmed due to the negative impact on your credit report. So, if you want timely loan sanctions in the future do not miss EMIs.
- The lender may increase the interest rate- The lender might increase the interest rate on your missed EMI. This will be an additional charge on your missed personal loan EMI disturbing your monthly budget.
Besides, personal loan with one month missed EMI is a minor default and can be rectified with the following simple steps mentioned below:
- Plan your EMIs- Before applying for instant personal loan online,use the loan EMI calculator to select the interest rate, tenure and EMI based on the loan amount you require. The loan EMI calculator will help you plan your monthly EMIs properly in your budget, so that you don’t even miss a single EMI.
- Maintain emergency funds- You must develop the habit of saving some money for emergency situations.For instance, if you lose your job and have to pay a loan, your savings will help you pay off EMIs on time, even if you don’t have a regular source of income.
- Avoid unnecessary expenses- When you have ongoing EMIs to finish, it is advisable to cut down on unnecessary expenses and luxury purchases.This will save some amount of surplus money to pay as EMIs.
There are borrowers who might be having a tight work schedule and so EMIs can be missed due to the busy routine. Hence, do select the automated EMI option while submitting the loan application. This will enable automatic deduction of EMIs on a fixed date every month. Hence, there is no scope of delayed payment and missed EMIs.