Loan EMI: A missed EMI is often a red flag that your budget is stretched thin. Use the 50-30-20 rule to manage your money: 50 per cent for essentials, 30 per cent for wants, and 20 per cent for debt and savings.
New Delhi: In India’s increasingly credit-driven economy, missing a loan EMI can feel stressful, but it doesn’t have to spell disaster. A single missed EMI could lead to penalties and a credit score dip, but how you respond truly matters. According to Kundan Shahi, Founder, Zavo, right actions and timely response can help minimise the financial impact and rebuild your creditworthiness.
While missing a loan payment is serious, it is not irreversible. However, clear communication, prompt repayment, and smarter financial planning can be helpful.
Here’s what you all need to know.
1. Understand the Immediate Impact
When you miss an EMI, lenders may:
Impose late payment penalties.
Continue to charge interest on the overdue amount.
Report the delay to credit bureaus after 30 days, leading to a significant point dip in your credit score.
Begin recovery calls and field visits, and if the default extends beyond a couple of cycles, serve loan recall/demand notices and initiate other legal actions as the lender may deem fit.
“Your credit score takes the biggest hit. Payment history makes up 35 per cent of your credit score, so one delay, even if unintentional, can lower your future loan eligibility,” Shahi said.
2. Act Fast and Clear the Overdue Amount
If the EMI is only a few days overdue, repay it immediately. Many lenders offer a 3–5 day grace period during which no penalty is applied. But once reported, the delayed status stays on your credit report.
3. Call Your Lender, It Helps
Don’t wait for recovery calls. Take charge and speak with your lender.
Explain the reason for the missed payment whether it’s a salary delay, medical emergency, or unexpected expenses.
Request a late fee waiver (especially if this is your first miss).
Explore if you qualify for loan restructuring, an EMI-free period, or tenure extension to lower your monthly burden.
4. Protect Your Credit Score
If your EMI is missed for over 30 days, it gets reported to credit bureaus like CIBIL or Experian. But future positive behavior can undo some of the damage.
Pay all upcoming EMIs on time
Avoid making multiple loan or credit card applications in the short term
Track your credit score regularly to monitor recovery
Shahi said that most credit scoring models weigh recent payment behavior more heavily, so one miss won’t define your profile forever if you bounce back quickly.
5. Prevent the Domino Effect
Don’t let one missed payment spiral into multiple defaults. According to YES Bank, skipping two or more EMIs puts you at risk of being categorized as a Non-Performing Asset (NPA), triggering legal recovery procedures and severely damaging your creditworthiness.
Set up auto-debit mandates, use repayment reminder apps, or switch to digital platforms that reward on-time repayments. Some fintech platforms even offer cashback or EMI discounts to encourage repayment discipline.
6. Review Your Budget and Plan Ahead
A missed EMI is often a red flag that your budget is stretched thin. Use the 50-30-20 rule to manage your money: 50 per cent for essentials, 30 per cent for wants, and 20 per cent for debt and savings.
If EMIs take up more than 40 per cent of your monthly income, explore debt consolidation, restructuring or balance transfers to reduce your outgo. You can also speak to a financial advisor if the situation feels overwhelming.
