What Happens When You Default On Your Instant Personal Loan EMI Payment?

Personal Loan EMI Payment

Most Personal Loan is unsecured forms of debt and is easily available from various lenders, offline and online. These are most suited for any type of financial emergencies and there is no particular restriction on the usage of the loan amount. But defaulting on the scheduled payment of your loan can have its consequences. You will be considered a defaulter when you miss paying your outstanding dues within the due period.

Who is a loan defaulter?

If you fail to pay your EMI on time, then you are considered a defaulter but will be termed only when you miss on a couple of EMI payments. There are two types of defaulters:

  • Genuine defaulter who makes his payments on time but misses only on one payment due to uninvited circumstances such as a job loss, etc. In such a case, few lenders understand the situation and may grant an extended grace period.
  • Less responsible defaulter is the one who has money to repay the loan, but due to sheer negligence ignores timely payments of EMI’s. Such an attitude is never encouraged by any lender.

What happens when you default?

  • Credit report & credit score – Your financial transactions related to your debt are recorded in your credit report. Payment details, EMI amount, etc., will be noted by CIBIL to decide your credit score. Your lender can report any overdue or non-payments to the CIBIL and this may harm your credit score. It is a well-known fact that even if you miss one payment, your credit score will be hampered and it can be difficult to obtain loans in the future.
  • Late fees or extra charges – If you pay your EMI late or non-payment of EMI’s will only attract additional fees from your lender.
  • It is always advisable to pay your dues before the scheduled date otherwise, you will be termed as a defaulter and will be charged.
  • Lowers your chances for future borrowing – Before approving your loan, your lender will cross-check your credit report and score to assess your financial ability and creditworthiness. Many lenders hesitate to approve loans if you have a poor credit score. If they decide to approve, they may approve a smaller amount with a high-interest rate.
  • Loss of asset – When you default on secured personal loans, you will lose the collateral that you have pledged. In some cases, your loan application contains the details of your guarantor and defaulting on your payment may land your guarantor in trouble.
  • Legal action – Sometimes, you may even land behind bars if you try to default on your payments. But this happens only when you default your instant personal loanfor multiple times.

Tips to streamline your loan defaulting

  • Request your lender to reduce the EMI – Convince your lender with a genuine reason for loan defaulting. If he agrees, then your EMI amount can be lowered to a certain manageable number. This can be done by pledging an asset or by increasing your loan tenure.
  • Postpone your payments – Request your lender for an EMI-free period where you can get relieved from paying your EMI’s for a few months.
  • Go for negotiations – Negotiate a settlement with your lender like the settlement amount should be less than your principal amount, etc.
  • The terms again vary from case-to-case.
  • This can be a win-win situation for both parties as your lender can retrieve some loan amount and you can close your instant personal loan by paying a lower amount.
  • Debt consolidation – Consolidate all your debts into a single loan. The best advantage is you do not have to keep a track of multiple EMI payments.
  • Request for loan insurance – During any unforeseen circumstance such as loss of a job, etc.,
  • You can cover your monthly loan payouts as loan insurance. You can thereby repay your loan amount, although the policy differs from one lender to another.


Remember that every form of debt comes with risk and responsibility. You need to be punctual on your payments so that you will maintain a healthy credit score. This way, you can achieve financial freedom and enjoy your life to the fullest! In case you are looking for instant personal loans, apply for a loan with FlexSalary as you have the option to make flexible repayments. Which saves you from becoming a loan defaulter.

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