Missing an Equated Monthly Instalment (EMI) payment by a day in India can result in serious fines along with a blow to your credit score. Lenders are tightening policies, and it is crucial that the borrower knows the effects of late payments and how to be exempted from them.
Concept of late payment and associated fines
Late charges are also variable, depending on the lender and the terms of the loan. Banks, for example, might charge late charges and interest on the balance. These charges accumulate very fast, and it is even more challenging to pay off your debt. New RBI regulations are intended to make it transparent by taking accounts as ‘past due’ only when they are overdue for more than three days from the date given in the billing statement.
For example: Taking Indian lenders for consideration, missing your first credit card EMI payment can lead to fines. Different banks have different rules and regulations in this regard:
- HDFC Bank: Charges ₹100 – ₹1,300 depending on the amount of late payment along with interest charges.
- Kotak Bank: Charges 8% on the amount defaulted + taxes.
- ICICI Bank: Charges ₹100 – ₹1,000 depending on the amount of late payment, plus interest charges.
That is why to save interest over interest borrowers should very strictly follow the repayment schedule and terms so that they do not suffer decisive financial reverses in life and investing careers.
Further, the charges applicable shared above are only indicative and are bound to change depending on the terms and conditions of the respective banks. For complete details consider reaching out to your lending institution.
What is the impact of missing EMIs on your credit score?
Missing an EMI can severely scar your credit score. The closer the default date, the higher the damage. Now credit scores generally depend on the last 36 months of credit history, so it is essential to act quickly before maximum damage occurs. Paying the missed EMI as early as possible and setting up auto-payments can prevent subsequent misses and save your credit score and credit utilisation ratio from more damage.
Reaching out to customer service
The very first step you should undertake to solve the issue is calling your lender’s customer care if you have defaulted on an EMI. Open and prompt communication in this regard is crucial. Most banks do have policies that waive off late fees or offer temporary relief, though this is mostly at their discretion.
Take HDFC Bank, for instance- it offers full 24/7 customer care assistance so that any issue is settled at the earliest. It would do you good to do just that to avoid further interest penalties and keep your credit profile in good health.
Conclusion
While it can be stressful to have an EMI fine for the first time, timely communication with the customer care helps reduce the blow. Moreover, understanding the charges and their effects on your credit report will also be useful for proper monetary management. With an anticipation of and response to the same within time, bad debts can be avoided in the long run.
Disclaimer: This article is for informational purposes only; please verify details with your lender as the late payment terms and conditions are subject to change.
