What If I Don’t Pay the EMI of a Personal loan?


  • Not paying your personal loan EMI? Stop this right away for your own good
  • Read this post to know the consequences you could face on not paying your loan dues

As personal loans are unsecured loans, they entail a great deal of risk to the lenders that disburse the same to borrowers. The greater degree of risk makes lenders keep a close eye on your EMI payments. If you are found to be not paying your Equated Monthly installments (EMIs) on your personal loan, there could be severe consequences that you may have to bear. Check out those consequences in this post.

Consequences to Have on Not Paying Personal Loan EMIs

Interest Burden to Rise

Non-payment of the EMIs will only increase your debt burden as the interest will keep accruing on the unpaid loan balance. And when you talk about the personal loan interest rates, they can be as high as 18%-20% per annum. So you can visualize the excess payment in store for you with the same.

Strict Legal Actions

If the lender finds you not paying your EMI for a lengthy period of say 6 months or so, It reserves all the rights to take legal actions against you. Don’t be surprised to receive legal notices.

Unpleasant Incident of People Knocking Your Door

If you fail to pay the EMI even after being served a legal notice, the lender might send executives to your doorstep and collect dues from you. Surrely, this won’t make you feel any good!

Credit Score Could Come Down Rapidly

Most importantly the damage that you will do to your credit score by not paying your EMI. Skipping the payment for a few days won’t impact your score. But once the default goes past 30 days, your lender will report the same to the concerned credit bureau. This will result in lowering your credit score, which could continue to slip if you hold on to your stance of not paying the EMIs.

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Lender Might Tell You to Go for Debt Settlement to Recover Some Money

If you hold on to the status quo of not paying EMis even after all that discussed above, maybe the lender could tell you to go for ‘Debt Settlement’. This will result in reduction of debt amount to a certain degree. If you agree to pay the reduced amount and do so eventually, the lender will report to the credit bureau as ‘Debt Settled’. This could help prevent a further slide in your credit score. But your credit history will suffer a lot with the same. So when you apply for fresh credits, the lender will get to see the spot of debt settled in your credit report. This spot will create an impression before the lender that you don’t manage your debts well. Once such an impression is created, the door for unsecured loans will be all but shut for you.

Looking at such consequences, you may wonder whether it is a good thing to do. If the lack of income is forcing you to do that, the lender will consider it and give you some time to pay back your dues. However, if the default is found intentional, the lender will only adopt a hard stance and tag you as a defaulter, putting your future credit aspirations at stake.

So In your best interest, you shouldn’t stop paying EMIs. If you have the savings, use them to pay your EMIs.

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Personal Loan Interest Rates October 2023
Fullerton India12.00% - 24.00%
HDFC Bank10.75% - 14.50%
ICICI Bank10.75% - 19.00%
IndusInd Bank10.25% - 26.00%
Kotak Bank10.99%
RBL14.00% - 23.00%
Standard Chartered Bank11.49%
Tata Capital10.50% - 24.00%
Home Loan Interest Rates October 2023
Axis Bank8.75% - 9.15%
Bank of Baroda8.50% - 10.60%
Citibank8.75% - 9.15%
HDFC8.50% - 9.40%
ICICI Bank9.00% - 9.85%
Indiabulls Housing Finance Limited8.65%
Kotak Bank8.85% - 9.40%
LIC Housing8.50% - 10.50%
Piramal Capital & Housing Finance10.50%
PNB Housing Finance8.50% - 10.95%
Reliance Home Finance8.75% - 14.00%
State Bank of India/SBI9.10% - 9.65%
Tata Capital8.95% - 12.00%