Getting a loan in today’s time has become much easier. From commercial banks to non-banking institutions, you have plenty of places to apply for a loan.
It doesn’t take much grinding to get your loan approved if you have a good credit score. This is why you should pay your bills on time.
While acquiring a loan is easy, paying it off on time can become challenging at times.
Many of you are curious to know what happens if you miss paying your loan EMI. In this post, we will be discussing the consequences you might face. To save yourself from these consequences, you should know how to pay bills right in time.
If you miss your loan EMI payment, you may have to face the following consequences:
Impacts your credit score negatively
Your loan application gets approved quickly if you have a good credit score. But if you fail to pay back the money on time, it will affect your credit score negatively. This is the most obvious consequence of all.
Maintaining a good credit score is important. It helps you to get new loans in your best interests. But if you miss even a single payment, it will lower your credit score by 50 to 70 points. If you don’t want that to happen, you should make it a point to make your loan EMI payments on time.
Late fee penalties
Delaying payments can result in late fee penalties. Most banks charge penalties of around 1-2% of the loan EMI. Paying penalties is not at all a pleasant thing. That’s because you are forced to pay extra money.
Just to be clear, you will have to pay the penalty fee along with the missed loan EMI payment next month. Not just that but you will also have to pay the next month’s EMI. Missing even a single payment can lead to the accumulation of multiple payments. If you don’t want that to happen, you should clear off the dues at the right time.
Recorded in your credit report
Late payments not only affect your credit score but also get recorded in your credit report. It is like a black mark in your credit report, which can create issues when you apply for a loan next time. Having a bad credit report can make it difficult for you to get your loan sanctioned.
When a bank notices this black mark, they are more likely to reject your loan application. In case your loan gets approved, you will be charged a higher rate of interest than usual.
Failing to pay loan EMI on time can lead to harassment by recovery agents. They will not let you live in peace until you clear off the dues. This is probably the worst part of late payments.
Banks send recovery agents to your home or workplace. Their job is to collect payment from you at all costs. Sometimes, they send you a 60-day notice before considering the loan as an NPA. Having to deal with recovery agents is not only embarrassing, but it can also be a very stressful event.
It is because of these reasons; delaying your EMI payment is never a good idea. Unless you are in deep trouble, you should always make your payments in time. This way you can avoid all the consequences and hassles that come with it. You should check out tips on how to paying your bills right in time.
You should apply for a loan only if you are confident about paying it back. In case you don’t have sufficient funds, you should avoid applying for a loan in the first place.