If you forget to pay EMI, you will get into trouble, the loss can be so huge:

News Topical, Digital Desk : Domestic debt is constantly increasing in India and along with it, cases of default i.e. not repaying loans are also increasing rapidly. If you have also taken a personal loan, then it is very important to repay the EMI every month on time. If you do not do this, then these five big problems will not leave you.

Credit score will take a big blow

Missing just one EMI can drop your credit score by 50 to 70 points. The effect of this is that it may be difficult for you to take a new loan in the future or the interest rates may be very high.

Late fees and fines increase the burden

Banks or NBFCs usually charge 1–2 percent late fee for missing an EMI. Along with this, penalty interest also gets added which increases the total cost of your loan even more. Not paying EMI has a direct impact on the credit score. If you have developed the habit of making payments on time, then you get better loan options in the future.

Small mistake or big crime? This is the difference

If you do not make the payment within 90 days, it is called a minor default. But after 90 days this loan is declared as NPA (Non-Performing Asset) and then your financial image gets spoiled. Its effect lasts for years and it may be difficult to get a loan or credit card in the future.

Recovery calls and court notices

If you do not pay EMI for 60 days, you start getting recovery calls. If you default for a longer period, the bank can also initiate legal action against you, especially under the Negotiable Instruments Act, 1881.

Will have an impact on future borrowings

When EMIs are missed repeatedly and the loan becomes an NPA, your financial track record is completely affected. Then either you will get a loan at a very high interest rate or the bank will refuse to give the loan.