What are the consequences or punishment for non-payment of a personal loan?

Personal loans are taken out by individuals in order to manage small and large ticket expenses. It is one of the most helpful forms of loans taken by individuals to manage instant cash and funds. Therefore, when you take an instant personal loan online, it is important that you consider the right repayment scheme that allows you to finish your loan within the right tenure. However, there are individuals that do not end up with a smooth repayment history due to several financial crises and emergencies. If that is the case, individuals need to go through several punishments and consequences for non-payment of personal loans for salaried within the loan tenure. The loan provider will charge and take various actions if you are not able to make the repayment within the loan tenure.

What happens when a personal loan is not repaid?

• If one misses the EMI payment once, the bank or lender may send a reminder in the form of an email, SMS, phone call, or app notification. If the borrower is still unable to pay due to unavoidable circumstances, the loan provider may extend the deadline or even grant a moratorium in extreme cases. This is only applicable if you have missed the personal loan repayment within 30 days. If the EMI due date is missed by 30 days, you will get constant reminders from your financial institution. The grace period is offered so that the individual is able to meet the smooth repayment in order to get enough time to complete the outstanding amount. This is done by the financial institution that will be in continuous contact with you through phone, email, and SMS in order to enable you to make the payment as soon as possible.
• However, if the EMI is still not paid, a penalty may be charged, but more importantly, this will have a significant impact on the borrower’s credit score, which will decline significantly. Even after 60 days, if you still do not make the payment on your personal loan, you will be charged a heavy late fee, and the late payment is also registered on your credit report. The loan provider will get it registered after 60 days of non-repayment with the credit bureau, and this eventually damages your credit score. After 60 days, it is considered a credit default, which gets registered and drops your credit score by more than 50 to 60 points. It is important that you consider the right repayment within 60 days and find every possible way to communicate with the bank or non-banking company to get the repayment done as soon as possible.
• It is also important to note that if the borrower fails to pay three consecutive EMIs, the loan provider then considers treating the loan as a non-performing asset, which will have a devastating effect on the borrower’s credit score and may even prevent the individual from borrowing in the future. with a record of non-performing assets. It will not be very easy for you to get loan opportunities and other credit accounts from banks and non-banking financial companies.

Wrapping up

Get an instant personal loan online with the help of a personal loan calculator that gets you the right monthly instalment that does not become a burden for you to pay.

Read Full: Personal Loans for Salaried Employees: A Quick Guide