EMI: Loans and EMIs are quite intricate topics, and even a single day’s delay can turn out to be highly expensive. Failing to make an EMI payment can result in significant penalties and negatively affect your credit score.
Crucial for the borrower to understand
Lenders have made their policies stricter, making it crucial for the borrower to understand the consequences of late payments and how to prevent them. Consequences for delayed EMI payments may differ based on the lender and the conditions of the loan. For instance, banks could impose a late payment fee and interest on the balance due. These fees accumulate rapidly, increasing the difficulty of repaying your loan.
Know the RBI regulations as well
Nonetheless, according to the new RBI regulations, an account will be deemed overdue only if it is late for more than three days from the date specified in the billing statement. Failing to make an EMI payment can significantly affect your credit score. The nearer the date of default, the more significant the harm. Typically, a credit score reflects the previous 36 months of credit records.
Crucial to take action promptly
Therefore, it is crucial to take action promptly before the most harm is inflicted. Clearing the overdue EMI promptly and establishing auto-payments can avert future defaults. This method can avoid significant harm to your credit score and credit utilization ratio.