What happens if you DEFAULT on your Personal Loan EMI Payment?

 


It is quite an unfortunate matter to default on your loan EMI payment after you have taken a loan from the market. An instant personal loan nowadays is very easy to get. Instant fund at minimum documentation is available in the market. You can quickly meet your ends using the fund from the personal loan. However, any borrowed loan has to be paid back. If you are not financially sound and you cannot pay back the loan amount, you are known as default. Being a defaulter will offer you several misshaping and will not make your future smooth.

Check out why and how being a defaulter can turn the table against you. Credit or any kind of loan in the future will not be an easy task.

What is default and who is a defaulter? 

In simple terms, any loan that is not paid back is known as default. The borrower who is not able to pay back the loan is known as a defaulter. There is always a stipulated date on which you need to pay your loan EMI. If you are not being able to pay within the date, it is counted as default. However there is a grace period in which you need to pay late fee charges, but you are not taken as a default. No one would like to have the title of a default, so ensure that you don’t end up missing a couple of EMIs.

Effects of default on a personal loan


  • Low credit score: if you are having a default on your personal loan, you end up with a negative credit score. As you miss a couple of EMIs, you will end up with a negative score. You will not be able to get any loan in future easily. You will face a lot of issues if you end up missing a couple of EMI and have a low credit score.
  • The high rate of interest: if you are termed as a defaulter, you will be taken as a risk by every loan provider. You will be charged a high rate of interest every time you apply for a personal loan. It will be higher compared to any borrower with good credit history. Ensure you are working on your debt repaying by paying your bills in time.
  • Low down future credit: Being a defaulter will stop you from borrowing in the future. You will not be eligible to borrow in the future.

Wrapping up

Missing payments will make you a defaulter. It will not give you a smooth credit journey in the future and will stop you from easy loan approval. Use a personal loan calculator and borrow responsibly.


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