Defaulted on your EMIs? Here is what you should do now | Credit Help India


What if you took out a bank loan and didn't pay the EMI on time? If the funds in your account are inadequate for any reason, your EMI will not be debited on the due date. Your bank will contact you, either by phone or email, to remind you to pay your dues. In certain instances, the bank allows you to pay the instalment within a grace period of a few days. The bank can charge you a late payment fee if you don't pay within the grace period. If you miss your EMI by three months or 90 days, you will be considered in default.


1.Higher Interest: If you default on your EMI several times, the bank will charge a higher interest rate on your loan because you are considered a risky borrower.

2.Impact on Credit Score: The bank will announce a default to the credit bureaus, lowering your credit score and adversely impacting your credit history.

3.Other serious repercussions:

:-Obtaining a loan can be more difficult, or you may be charged a higher interest rate.

:-Several companies now conduct credit checks on prospective employees before recruiting them. Your chances of getting your dream job can be hampered if you have a bad credit report.


1.Defer paying EMI: If you've default an EMI payment, contact your bank and talk with your loan officer. If you have a legitimate reason, such as a family medical emergency that required funds to be diverted, the bank will agree and allow you to pay the EMI the following month. However, make sure you pay all months' EMIs on time. You can be charged a late payment fee by the bank.

2.Tenure Extension: If the cause is more long-term, such as a pay cut or job loss, contact your bank again and attempt to restructure the loan. Request that the bank reduce the EMI amount by expanding the repayment period. This will provide you with some relief, and you will be able to start repaying your EMIs the next month.

3.Interest Payment Flexibility: Depending on your credit history and relationship with the bank, you will be able to request to pay only the interest for a few months before your financial burden is resolved. Under the understanding that your payment will be made on time after that. You might be asked to choose a specific time when you want to relax. Remember, this isn't normal, and the bank's decision to adhere to this condition is entirely up to them. Also, make sure you notify the bank in writing of your plan to repay and restart your EMIs at the agreed-upon period.

4.Loan against investment/insurance: You could borrow against an asset or financial investment, such as gold, a fixed deposit, or an insurance policy, and then repay the loan. A secured loan, which is secured by collateral, has a lower interest rate and can be repaid later. Use this money to pay off your higher-interest personal loan or credit card balance. Prepay a portion of your debt, even though you can't pay it off completely. This would also lower your EMI payment, making it more manageable.

5.Loan Settlement: If none of these options are viable, talk with your bank about repaying your loan. This means you agree to repay a portion of the loan sum, and the bank considers the loan to be "settled." While the first four steps will help you maintain your credit score, paying off your loan will hurt your credit score and history. A settled loan is often regarded more favourably than a loan that is fully repaid.

Building an emergency fund that will cover three to six months of critical costs, like EMIs, is the long-term solution to prevent such circumstances. This will guarantee that you have enough money to repay your loan even though you have an emergency.

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