What Happens if EMI is not Deducted on Due Date?
If an EMI (Equated Monthly Installment) is not deducted from your bank account as per the scheduled repayment, the following consequences may occur -
- Late Payment Charges - The lender or financial institution may impose late payment charges or penalties for the missed EMI. These charges can differ depending on the terms and conditions of your loan agreement.
- Negative Impact on Credit Score - Non-payment or delayed payment of EMIs can negatively impact your credit score. Credit bureaus track your payment history, and missed or late payments can lower your credit score, making it harder to obtain credit in the future.
- Increased Interest and Finance Charges - When you miss an EMI payment, interest charges may continue to accrue on the outstanding balance. This means you'll end up paying more interest over the course of your loan, increasing the overall cost.
- Collection Calls and Notices - The lender may start contacting you through phone calls, emails, or letters to remind you about the missed payment and request immediate payment. They may also send legal notices if the non-payment persists.
- Legal Action - In extreme cases of non-payment, the lender may initiate legal proceedings to recover the outstanding amount. This can lead to additional expenses, such as legal fees and court costs.
To avoid these consequences, it's crucial to communicate with your lender if you anticipate difficulty in making an EMI payment. They may offer alternative repayment options or assist you in finding a solution. It's generally advisable to prioritize timely EMI payments to maintain a good credit history and financial discipline.