What happens if you are unable to pay a personal loan in India?

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By Admin Desk

When you take a personal loan in India the most important aspect that you need to keep in mind is paying the specified EMI on time. Sometimes, it may happen that you may not be able to repay the personal loan due to any reason. Now, what happens to the defaulter, and what is the action taken against a person who fails to repay the personal loan? Here is a short guide to describe the entire concept from scratch. 

A Brief about Personal Loan EMI

A personal loan is taken by the borrower to meet their personal financial needs. Several Banks, Credit Union, Online Lenders, NBFCs are providing personal loans for genuine personal causes such as debt consolidation, home improvement, buying a car, etc. But, to borrow a personal loan from any financial institution, you have to fulfill some necessary criteria like having a good credit report, a fixed and regular income, etc. If you have a better CIBIL score and a permanent income source, there is a 100% chance that you will get your desired amount in the form of a personal loan from any bank or NBFC. However, the installment amount or EMI, repayment tenure, and the ROI of different lenders may be different. So, choose the reliable lender providing you a loan on minimum documentation, minimum ROI, and flexible loan repayment tenure.

Failed to pay the personal loan EMI? Check the repercussions for the same!

A regular and fixed monthly payment provided by a borrower to a money lending organization is called EMI or equated monthly installment. An EMI consists of interest and the principal loan amount will be generated each month on a specified day. And, it is mandatory for the borrower to pay the EMI on the set day otherwise the institution has the right to take action against them. Go through the following examples:

  • If the borrower fails to pay EMI for the first time then the financial institution sends a reminder to the defaulter. This reminder is in the form of a message or email or the financial institution may even call the defaulter. The moneylender person can give some extra time to pay the EMI to the borrower.
  • Even after the extension of the deadline the person fails to repay the loan then a penalty is imposed by the lender on the borrower. Now that not only increases the financial burden on the defaulter but also reflects poorly on his creditworthiness and his credit score gets affected adversely.
  • Failure to repay 3 consecutive EMIs in a row can have a devastating effect on the credit score of the borrower. The lending financial institute labels the loan as a non-performing asset and the borrower may fail to get any loan from any other financial institution in the future. 

Defaulters need to be ready for legal actions:

  • The borrower needs to keep in mind that if they fail to repay the loan for more than 180 days then the lending financial institute can take legal action against the defaulter. 
  • Under Section 138 of the Negotiable Instruments Act of 1881, the financial institution can file a legal case against the defaulter.
  • If due to some genuine unavoidable circumstances the borrower fails to repay the loan amount then the financial institution may extend the loan repayment deadline. But, the extension of the loan repayment deadline cannot be done beyond a certain limit.
  • If it is found that the defaulter is deliberately not paying the money though he has the money to pay the EMI and if he disposes of the collateral without bringing it to the notice of the lender then the lender can sue the defaulter. In such cases, the financial institution can file a criminal case against the defaulter and take him to the court of law.

Also, failing to pay personal loan EMI at a specified time will affect your CIBIL score, and you may be charged with a fine. 

The rights of the borrower are also to be respected:

There are certain rights of the borrower and the financial institution has to respect the same.

  • Proper notice has to be given to the defaulter before taking any action against the borrower
  • The borrower has the right to the fair value of the collateral that he has given to the lender for getting the loan
  • The borrower has the right to be heard and he has to be given a fair chance to explain the reasons for the delay in the payment
  • The borrower has the right to claim the balance that remains after the collateral has been disposed of by the lender to get the loan amount
  • The defaulter has to be treated politely and he must not be demeaned in any way.

Check the probable repercussions of defaulting EMI repayment:

  • In the case of secured loans, the borrower gives collateral to the lender and if the borrower fails to repay the loan then the lender can sell the collateral to recover the loan amount. If the borrower can pay the dues then the auction of the collateral can be stopped even if the notice for the same has been sent.
  • Defaulting the loan repayment has a serious impact on the credit score of the borrower and getting a loan in the future can become next to impossible.

Approach Money View for personal loans:

If you need a personal loan at the earliest then you can approach Money View which is considered as one of the reliable financial institutes. It provides loans to the borrower at the earliest with minimum documentation. What you should do is mention the authentic reason for taking the loan. If they find it genuine, they check your CIBIL score and ask about your source of income. Considering all facts and figures, the loan department of Money View can approve or disapprove your loan application. However, the company has its own set of rules for loan repayment, EMI, or penalties. 

How to avail of loan from Money View

  • In the case of eligible candidates, the application and all the documents have to be submitted online on the website or app of Money View.
  • The application and documents are verified and the loan agreement is sent to the applicant
  • Once the loan terms and conditions are accepted the loan amount is disbursed and the amount is credited to the applicant’s bank account.


When you are opting for a personal loan it is important to ensure that the EMI for the same should be paid on time. In case the borrower fails to make the payment of the personal loan EMI for a long time then the financial institution can take legal action against the borrower. So, always try to pay your EMI on time to avoid any kind of penalty as it badly impacts your credit score. You can contact the team of Money View for availing of personal loans at competitive interest rates. Also, discuss the better available options for loan repayment tenure with their loan department team.