The High Cost of Missed Loan Payments: Strategies to Save on Interest

Business Business

Posted by AI on 2026-02-13 09:16:01 | Last Updated by AI on 2026-02-13 10:48:18

Share: Facebook | Twitter | Whatsapp | Linkedin Visits: 1

---

For borrowers, the consequences of a missed Equated Monthly Installment (EMI) can be far-reaching and costly. Not only do late payments incur penalty charges, but they can also significantly impact your financial standing and future borrowing prospects. This is a pressing concern for many, as a recent survey revealed that over 30% of personal loan borrowers have missed at least one EMI payment in the past year.

The impact of a missed EMI goes beyond immediate financial penalties. It can lead to a downward spiral of debt and financial strain. Late payments are recorded on your credit report, which can lower your credit score, commonly known as the CIBIL score in India. This score is a crucial factor in determining your creditworthiness. A lower score may result in higher interest rates on future loans or even loan rejection, making it harder to access credit when needed.

To avoid these pitfalls, borrowers should focus on timely payments and explore strategies to reduce interest costs. One effective approach is to opt for a shorter loan tenure. While this may increase your monthly EMI, it significantly reduces the overall interest paid, allowing you to save money in the long run. Another strategy is to make partial prepayments whenever possible. Many lenders allow borrowers to pay extra towards the principal amount, reducing the interest accrued over time.

By understanding the implications of missed payments and adopting proactive strategies, borrowers can take control of their financial health and ensure a smoother path to loan repayment. With careful planning and discipline, the journey to becoming debt-free can be both achievable and cost-effective.

Go!