Missed A Personal Loan EMI – What Should You Do?

Personal loans are offered to a borrower without having to put down any collateral. This may seem an easy way out during a financial emergency or an attractive way of financing a dream holiday. However, before opting for a personal loan, you need to be sure that you are in a position to pay the personal loan EMIs regularly. Missing EMI deadlines affect your credit rating. This in turn affects your ability to avail loans in future as well as the interest rates lenders offer you.

Perhaps the first thing to do to avoid missing a personal loan EMI is to plan your personal loan well. Calculate your spare income with which you will pay the EMI. It is always a good practice to keep a buffer between spare income and EMI in order to have some ready cash available for further contingencies. Thus, if you have calculated a spare income of INR 10,000/-, do not commit the entire amount to EMI payments for your personal loan.

The second thing you may find useful to do is research and zero in on the lender that is offering the most advantageous personal loan interest rates and allied terms and conditions. Thirdly, there are several platforms offering personal loan EMI calculators online. Key in different interest rates and loan terms. The EMI calculator for personal loans will then tell you how these different interest rates and tenures affect your personal loan EMI.

But what if, despite your best efforts you are faced with such a contingency that you are forced to skip a personal loan EMI. Here are some of the things we recommend you do to lessen the impact on your credit score.

Contact Your Loan Officer:

Reach out to the Loan Officer as soon as you become aware that you will not be able to pay the EMI on time. It is best done before the EMI due date. If you have a genuine reason, the bank or NBFC may show some leniency and offer you a payment holiday. This usually comes with some charges and penalties. If you feel that the cash crunch preventing you from paying your EMI could continue for some time, negotiate for restructuring your loan. The lender could increase the term of the loan and lessen the EMI. Alternatively, you could ask for a top-up to your loan. Many lenders will agree to a top up only if you have already successfully completed payment of 6 EMIs or more.

Seek A Fresh Loan:

You could also consider seeking a fresh loan by putting up a collateral such as gold, or securities. Such loans come with lower interest rates than personal loans. However, keep in mind that while a fresh loan will mean loan processing charges all over again, delayed EMIs mean penalties and a downgrade of your credit score.

The Loan Settlement Option:

In the unfortunate circumstance that you find yourself with your back to the wall, and are simply not able to pay your EMI, even at a later date, request your lender to grant a loan settlement. This is only granted in extreme cases, if the lender is convinced you have very genuine reasons for not repaying the entire loan. A settlement may be granted on part of the loan amount while you will have to pay the remaining part.

Getting a personal loan is relatively easy today with several platforms offering online and instant approvals. However, it is best to take it only if absolutely necessary and after carefully assessing your ability to pay the EMIs on time.