What happens if I default on my Top Up Loan?

Defaulting on any loan repayment—be it your original loan or a top-up loan—has negative consequences that can impact your financial health. When you miss your Equated Monthly Instalment (EMI) payment due date on a top-up loan, it is usually treated as a default on the overall or aggregate outstanding loan amount. This outstanding amount includes what you originally borrowed plus the sanctioned top up loan amount.

In such a case, the lending institution will first initiate follow-ups through messages, emails, or agents to retrieve the missed payment or discuss alternative options if you are facing temporary cash flow issues.

If the default persists for 90 days or 3 months despite reminders, they are liable to report your loan account as a Non-Performing Asset (NPA) to credit bureaus like CIBIL. This significantly drops your credit score, jeopardising eligibility for future loans or credit cards.

Further, legal proceedings may begin to recover the outstanding dues on your loan account, including the top up loan component. This can mean legal notices, calls from collection agents, or even repossession of the asset you have pledged for the loan recovery.