What is the financial impact of missing a personal loan payment?

Missing a personal loan payment in India can quickly spiral into bigger financial trouble if not addressed promptly. The first thing that happens is a late payment fee is added to your next EMI. This fee, set by your lender, immediately pushes up your overall repayment amount. On top of this, most lenders charge penal interest on the overdue sum making your loan even less cost effective if you continue to miss payments.

Your bank or NBFC will report the missed payment to credit bureaus like CIBIL and Experian. Even one missed EMI can cause your credit score to drop, which makes it much tougher to get sanctioned for loans or credit cards later. If you keep missing payments, the lender may start collection calls and could classify your loan as a default. This can result in legal notices or even court action, which brings extra costs and stress. For major defaults, the record can stay on your credit report for up to 7 years which affects your reputation with all lenders.

If you have a co-signer or guarantor then they are also at risk. Lenders can ask them to pay, which may strain relationships and hurt their credit scores as well. To avoid these problems, always set reminders for EMI dates and keep enough funds in your account. If you know you’ll miss a payment, contact your lender immediately. Many lenders are willing to discuss restructuring or offer temporary relief if you’re facing genuine financial hardship. Taking quick action helps protect your credit and keeps your finances on track.