Online loans are treated just like any other loan you take from banks and NBFCs. The same rules apply when you default on an online loan. Defaults generally can have a negative impact on your future borrowing.
When you fail to pay your EMI on the online loan, the lender will send you an intimation about the amount due to be paid. You can then repay the loan with a penalty as prescribed by the lender. If you continue to ignore the warning and default in the upcoming EMIs, the lender will send you repeated warnings about your action. Failing to pay continuously for more than 6 months will make the lender to write off your account. This will have a serious impact on your credit score. No lender would consider you a creditworthy individual after this status.
Additional Reading: What Happens When You Cannot Repay Your Home Loan?
Credit Reporting:
Every lender updates your credit activities to the credit bureaus periodically. When defaults happen, it gets reported to the bureaus who calculate your credit score. Defaults is a negative issue which will certainly have a negative impact on your credit score. You will find your credit score reduced after defaulting on your online loan.
Affects Future Borrowing:
You may begin to think what’s the big deal if my credit score gets affected. A good credit health is very important in getting any form of credit in the future. The rejection of a loan application is very much likely to happen with the bad credit score. Hence, even a single default can impact your credit score negatively.
Some employers too check your credit health before offering the job. It is to see how responsible you are with your financial activities. Hence, do not have a thought of defaulting on any loan.
Additional Reading: Know What Happens When You Fail to Repay Your Loan!