What Happens If You Fail to Repay Your Personal Loan?


Personal loan defaults damage your credit rating and make it difficult for you to obtain loans from both banking and non-banking companies in the future. Your lender retains ownership of your property and the original property documents until you have returned the total loan amount.

A personal loan requires you to pay back the total amount owed, including the interest, in equal monthly installments (EMIs). As long as you continue to make your loan payments on schedule, your connection with the bank will stay intact.

An NPA loan is one where the borrower defaults on the loan

Your loan becomes a Non-Performing Asset if you miss a payment for 90 days in a row (NPA). When you fail to make a payment for three months in a row, your loan gets considered non-performing. On the other hand, banks do not instantly take the borrowers’ assets who default immediately.

A bank or financial institution can file a lawsuit against a borrower to enforce a mortgage on an asset. They have the option of either a public auction or a private deal to sell the item they have seized.

Impact on the credit rating

When you fail to pay back a loan, your credit rating is the first to suffer. Borrowing money from a bank or other lending organization will be difficult if your credit score is low. Because you owe money to the lender, they have the option of retaking your property and auctioning it. Guaranteed payday loan online services will help you to pay your loan timely.

What choices do you have?

It’s common for people to turn off their phones and cease contacting their financial institutions. Herein lays the essence of the matter.

With a moratorium, you can prevent default if you have difficulties making your loan payments. The only exception to the loan rule is if you have previously defaulted on your loan or are at risk of doing so in the future because of a job loss or wage cut. Talk to them and explain why you can’t pay because they may have a solution you hadn’t considered.

Your lender will offer you a chance to state your case and explain what went awry in the process. Payments might get put on hold for some time. If you want to lower your monthly payment, you can do so, but your loan term will be longer. It’s also possible to ask for a restructuring of the loan, which would result in fewer restrictions on fees and lower interest rates.


It’s not the end of the world if you’re late with your EMI payments. A defaulter status on your credit record will prevent you from acquiring further loans. Therefore it’s always advisable to negotiate with the bank and pay off the obligations or reach an agreement. You can count on banks to support you because they are just as harmed if you don’t pay your debts as you are.

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