The Cost of Missed Payments: Why Every EMI Count

The Cost of Missed Payments: Why Every EMI Count

EMI Calculator Financial Advice & Tips
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In recent years, more people are choosing personal loans for quick financial solutions. These loans are easy to get with minimal paperwork and fast approval and offer flexibility in paying back. However, you must meet each monthly payment, known as an Equated Monthly Instalment (EMI), and paying it on time is crucial. This ensures the benefits of personal loans stick around and prevents any financial issues. So, despite their ease of access, keeping up with your regular EMI payments is essential for a smooth and trouble-free personal loan experience.

Understanding EMI Payments

EMI, short for Equated Monthly Instalment, forms the backbone of loan repayment plans. Borrowers follow this structured system, encompassing both principal and interest components, to repay a loan gradually. This mechanism allows you to return the borrowed sum over a set timeframe through manageable monthly instalments. The primary goal of the EMI system is to enhance the convenience and affordability of loan repayment.

The Consequences of Missed EMI Payments

  1. Lower Credit Score

    Personal loan approval depends on a credit score, typically requiring 720 or higher. Missing one EMI significantly drops the score by 50-70 points, affecting future transactions.

    Prioritising timely EMI payments is crucial for maintaining a good credit score and ensuring smooth financial transactions.

  2. Financial Consequences

    Lenders often impose fines, typically ranging from 1% to 2% of the EMI amount, to motivate you to submit your payments on time. While these fines may appear minor individually, their collective impact can snowball into a burden over time.

    Recognising the importance of prompt payments is essential for avoiding extra expenses and protecting one's financial well-being. Being aware of the consequences of missing EMIs helps you manage your finances and prevents the gradual buildup of avoidable financial pressure.

  3. Future Borrowing Challenges

    Missing an EMI goes beyond immediate financial penalties, leaving a red flag on your credit history. It indicates potential repayment risk to future lenders. Even if the credit score improves later, the mark on the credit report persists, influencing decisions on future loan applications.

    It's a precarious path that can impact an individual's financial flexibility when they need it the most, underlining the importance of consistent EMI payments for long-term financial well-being.

  4. Collateral at Risk

    Personal loans are known for not requiring collateral. In some cases, borrowers may choose to provide collateral. If you miss your payments, the lender has the right to seize the collateral. While this may sound strict, it highlights the lender's need to safeguard their investments and stresses how important it is for borrowers to fulfil their obligations. Protecting pledged assets requires a dedication to meeting all payment responsibilities. It serves as a reminder of the repercussions of failing to make payments. It encourages borrowers to honour their commitments in order to protect their collateral and maintain a positive financial relationship with the lender.

  5. Legal Hassles and Recovery Agents

    If borrowers fail to make EMI payments for more than 90 days, they could face legal consequences. This situation may result in prolonged involvement in matters, which can be time-consuming and financially draining. Bank collection agents might further burden the borrower with stress. The 60-day warning period prior to categorising the loan as a Non-Performing Asset (NPA) is a stage that urges borrowers to improve their payment habits before legal measures are taken. Dealing with issues after this timeframe can be complex and challenging, underscoring the importance of addressing payment concerns to avoid such grave repercussions.

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Prevent Defaulting with Online EMI Payments

  1. Timely Payments

    Online platforms often remind you about upcoming EMI payments, making it less likely to forget or miss due dates. This helps ensure timely payments, maintains your financial standing, and offers a convenient way to handle your repayment schedule without any hassle.

  2. Convenience

    Paying EMIs online is super convenient, skipping the need for in-person bank visits. This lets you make easy payments from home or the office, giving unmatched convenience. Shifting to online payments not only makes the process simpler but also offers flexibility, helping manage financial commitments easily. Going digital saves time, skips queues, and makes managing and repaying loans easier.

  3. Paperless Transactions

    Online EMI payment methods contribute to a sustainable environment by minimising the need for paper transactions. This eco-friendly approach aligns with modern digital practices.

Tips to Never Miss Payments

Missing EMIs tanks your credit score and piles on fees, making future loans a nightmare. Besides, having a record of consistent EMI payments will help you build your credit score. The following are some tips that might help you never default on EMI payments.

  1. Regular Checks

    Checking your EMI status regularly is essential for good financial planning. This proactive approach helps you avoid surprises, allowing you to maintain control over your budget. Regular updates on your EMI status enable you to make informed decisions, preventing potential financial stress and ensuring a smooth repayment process for your loans.

  2. Immediate Rectification

    If you notice any issues regarding your EMI status, it's important to address them. By taking this approach, you can prevent problems from escalating and maintain a smooth repayment process. Dealing with discrepancies is crucial for upholding financial standing and avoiding complications that may arise if neglected. This proactive stance helps you remain consistent with your obligations, reducing stress and complications in the process.


Taking out a loan is a decision that can have long-lasting effects on your financial health. Although getting the loan may seem simple, it's essential to make sure you make your payments on time. Failing to do so can lower your credit score, limit your ability to borrow in the future, and put your collateral at risk. Being aware of these outcomes is crucial for maintaining security, as making payments on your EMIs is an investment in a successful tomorrow.

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