scorecardresearchWhat to do if you have missed your loan EMI?

What to do if you have missed your loan EMI?

Updated: 17 Mar 2022, 02:10 PM IST

Getting a loan nowadays is easier than it ever was. Millions of borrowers have used their chosen banks and small finance organisations to procure loans. While getting a loan is ultra-simple, repaying it on time is not as easy. We give the lowdown on its various nuances.

Missing loan EMI can have a negative influence on your credit score, and your lender may impose penalties as well.

Missing loan EMI can have a negative influence on your credit score, and your lender may impose penalties as well.

EMIs might be missed for a variety of reasons. Despite your best efforts, unforeseen circumstances such as job loss or a medical emergency may cause you to miss your loan EMI payment. In this case, delaying your EMI payment will result in consequences the following month. 

However, there are strategies to avoid a situation like this in the future. Many people opt for auto-debit/Nach mandate through a specific account in which they hold the bare minimum of funds and frequently forget to top up that account. Missing an EMI can have a negative influence on your credit score, and your lender may impose penalties as well.

Missed EMIs are divided into two groups

They are as follows:

Major defaults

These, as the name implies, are subject to the harshest sanctions. If you have not made any payments in the last 90 days or longer, it is called a major default. It will appear on your credit report and may have an influence on future loans.

Most lenders will not approve loan applications from candidates who have a history of major credit defaults on their credit reports. When your loan account experiences a major default, it is designated as a non-performing asset (NPA) (Non-Performing Asset).

Minor defaults

As the name says, this type of default has modest ramifications that can be remedied. If the last payment was made within 90 days or fewer, the missed EMI is considered a mild default. Borrowers who have modest defaults on their loan accounts can avoid the unfavourable repercussions if they act quickly enough.

Missed EMIs can have consequences

Let's look at what happens if you don't pay the EMI.

Impacts the credit score negatively

The most well-known consequence of failing to make an EMI payment is this. If you don't pay your EMI on time, it will be marked as a small or big default on your credit report. As a result, your credit rating suffers.

When applying for a new loan, maintaining a high credit score is critical. It ensures that your loan application is approved and that the best interest rates are supplied to you. If you miss even one EMI payment, your credit score will drop by 50 to 70 points.

Noted in the credit report

Missing an EMI payment results in a black mark on your credit report in addition to lowering your credit score. Your credit report is used by lenders to assess your creditworthiness. They are unlikely to approve your loan application if they detect this black mark. Even if your loan application is approved, you will be subjected to higher interest rates.

Late fee penalties

When a borrower fails to pay an EMI on time, several lenders charge late fees. Typically, the penalty assessed is between 1% and 2% of the EMI. In the next cycle, you must pay the missing EMI, as well as the penalty and the EMI for the next month.

Harassment by recovery agents

This is the worst-case scenario and the most distressing of all the outcomes. Banks and financing institutions will occasionally send recovery agents to your home or place of business. These collection agencies' job is to get you to pay the money you owe. Most lenders use recovery agents only when a loan is classed as non-performing. Lenders typically provide debtors with a 60-day notice before considering a loan to be non-performing.

Some steps that might help you in case you miss your loan EMI!

Step 1

Simply follow the instructions below if you have taken a loan from a bank where you have a savings account:

Login >> Accounts >> Loans >> Select Loan no. Click on "Pay Overdue" >> "Pay Navigate to Account >> Manually enter the amount >> Enter the one-time password (OTP) (which will be delivered to your phone).

Step 2

If you have a loan from a bank and don't have a savings account, visit the bank's website to see if they accept payment via UPI or other electronic means. Then take the following steps:

  • Make a payment with BHIM or another UPI-enabled financial app.
  • To pay using VPA (Virtual Payment Address) for loans, go to UPI and select pay using VPA (Virtual Payment Address).
  • Fill in the loan ID: loan account number>@axisbank or whatever your bank's UPI name is. Take, for example, loans. ********aTDBIbank 3
  • Fill in the amount and any further comments. And then press the submit button.


Using the net banking portal for other banks;

Make a payment by clicking on *Make a payment' >> Repayment of a Loan >> Choose *the bank from which you borrowed money >> Other net banking facilities -> Fill in the loan information.


Make an NEFT with the following information:

Name of the Beneficiary:

The bank that will benefit: Name of the financial institution from whom you obtained a loan

Beneficiary IFSC: on your lender's website, input the beneficiary IFSC (Alpha Numeric Loan No.)

Beneficiary Account: < your Loan Number>

Step 3

Go to the bank branch from where you got the loan, get a cash deposit receipt, enter the EMI amount, fill in your loan account number in the account number field, and deposit the cash.

How to avoid missing EMI payments?

As you can see, missing even a single EMI might have serious implications. As a result, it would be beneficial if you assessed whether you would be able to pay the EMIs on time before borrowing a loan.

Here are a few tips to help you better arrange your budget and make on-time EMI payments.

Be Vigilant

If you believe you will be unable to pay your impending EMI on time, you must act quickly before it is too late. Before the due date, contact your lender and explain your financial situation. Check with the lender to see whether EMIs can be temporarily paused. 

Otherwise, you might ask the lender to lower your EMI until your financial condition improves. Borrowers' petitions are usually granted by most lenders, especially if they have never defaulted previously.

Be prepared with an emergency fund

Financial experts advise that you keep an emergency fund on hand to use in the event of a financial emergency. Your emergency fund should be able to cover six months of your earnings. In this manner, if your income stream is disrupted, you can use this cash to cover your household bills and EMIs.

You can request the bank to pause EMI payments temporarily

If you have lost income due to layoffs or a job loss, you can seek assistance from your lender. Lenders frequently agree to a halt in EMI demands, especially when the borrower is experiencing financial hardship.

The majority of banks provide an EMI waiver for 3 to 6 months (no EMIs for the next three to six months). Once your financial situation has improved, you can resume paying the loan.

Ask for help from family and friends

To help you repay the EMIs, you can ask your friends or family for an informal loan. Once your financial situation improves, you can repay your friend the borrowed amount.

It may be tempting to take out a loan because they are readily available. However, before applying for a loan, you must thoroughly assess your financial status and determine whether you can afford it. Defaulting on a loan EMI has a number of implications. As a result, make sure you pay your EMIs on time.

We explain the key features of no-cost EMIs here.
First Published: 15 Mar 2022, 05:06 PM IST