{"id":10988,"date":"2023-08-29T02:38:09","date_gmt":"2023-08-29T02:38:09","guid":{"rendered":"\/blog\/?p=10988"},"modified":"2025-12-14T21:24:26","modified_gmt":"2025-12-14T15:54:26","slug":"what-happens-if-a-personal-loan-emi-is-missed","status":"publish","type":"post","link":"https:\/\/www.tatacapital.com\/blog\/personal-use-loan\/what-happens-if-a-personal-loan-emi-is-missed\/","title":{"rendered":"What Happens if a Personal Loan EMI is Missed?"},"content":{"rendered":"\n

A personal loan is an ideal choice of funding for borrowers who don\u2019t want to pledge any asset as collateral with the lender. However, such loans come at the cost of relatively higher interest rates. When you apply for personal loan<\/a>, you must ensure that you\u2019d be able to manage the monthly EMI responsibly without defaulting. <\/p>\n\n\n\n

A personal loan EMI calculator<\/a> available online lets you calculate the EMI amount you will have to pay each month against the principal for a specified loan tenure. You only have to enter the principal amount, loan tenure and the personal loan interest rate<\/a>. You can then plan your EMIs conveniently to repay the loan.<\/p>\n\n\n\n

This article explores EMI options for personal loans, what happens if EMI is not paid on time, <\/strong>and what steps you can take when you default on EMI payments.<\/p>\n\n\n\n

Some EMI options available for personal loans include the following:<\/strong><\/h3>\n\n\n\n

1. Standard EMI<\/p>\n\n\n\n

This is the most common option wherein you can repay your loan amount inclusive of interest every month. In a standard EMI, the rate of interest is charged on the principal.<\/p>\n\n\n\n

2. Flexi Interest-Only Loan EMI<\/p>\n\n\n\n

This EMI option comes with a pre-approved cash limit that you can withdraw when you need funds. The interest is only charged on the amount you have used instead of the total principal amount.<\/p>\n\n\n\n

3. Step-Up Flexi Loan EMI<\/p>\n\n\n\n

This option offers maximum flexibility; you can pay lower EMIs in the beginning and gradually pay more as your income increases over time.<\/p>\n\n\n\n

Also, read – Consequences Of Missing Home Loan EMIs<\/a><\/p>\n\n\n\n

What happens if EMI is not paid on time?<\/strong><\/h2>\n\n\n\n

There could be times when you miss out on an EMI payment. This could be for a variety of reasons, ranging from lack of funds to simply forgetting to pay an instalment. Defaulting on an EMI could be telling.<\/p>\n\n\n\n

Here is what happens if EMI is not paid on time.<\/strong><\/h3>\n\n\n\n

1. CIBIL Score:<\/p>\n\n\n\n

CIBIL score is one of the most significant determinants of personal loan eligibility<\/a>. A score of above 750 is considered ideal for demonstrating a good credit history. Even a single instance of defaulting on EMI payments can drag your CIBIL score<\/a> down by about 50 to 70 points. <\/p>\n\n\n\n

2. Creditworthiness:<\/p>\n\n\n\n

Any instance of missing out on personal loan EMI payments lends a bad impression on your repayment history. Despite having a CIBIL score of above 750, lending institutions reject loan applications based on such negative instances on a credit report. Lenders label such individuals as \u2018risky\u2019 borrowers. <\/p>\n\n\n\n

3. Penalties and Late Fees on Missed EMIs:<\/p>\n\n\n\n

Lending institutions often charge a late fee and penalty for late payment of EMI<\/strong> from those who miss EMIs. Generally, this varies between 1-2% of the due amount. <\/p>\n\n\n\n

4. Recovery Process After Missed EMI:<\/p>\n\n\n\n

Sometimes, lending institutions deploy recovery agents once the period of default has extended beyond three months. In such situations, lenders typically issue a notice of sixty days to the borrower before labeling the loan as NPA.<\/p>\n\n\n\n

Also, read –<\/strong> Steps to take if you can\u2019t Pay Your Personal Loan<\/a><\/p>\n\n\n\n

Loan Restructuring Options for Missed EMIs<\/strong><\/h2>\n\n\n\n

Now that you know about what happens if EMI is missed,<\/strong> let\u2019s move on to loan restructuring, one of the ways to deal with missed EMIs.<\/p>\n\n\n\n

Loan restructuring allows you to change the terms of the initial loan agreement to ease your financial burden. This can involve extending the repayment tenure or reducing interest rates.<\/p>\n\n\n\n

Some common loan restructuring options you can consider include:<\/strong><\/h3>\n\n\n\n