What will happen if I don’t repay my loan on time?

When a fixed amount of money is lent to the borrower with a fixed repayment time, it is called personal loan. They do have a fixed interest rate over the repayment tenure.

Further, personal loans are segregated to two other categories, unsecured and secured, which we shall discuss more on. Beside all the benefits, if you still want to default your score, It is pretty good as defaulting your financial image.

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Which defaulter are you?

The careless: There are people who avail the loan and not care enough to repay it on time for many reasons such improper calculation between income and expenses.

People realise those mistakes once they start paying the EMI. They just manage paying the EMI, which in most of the cases not completely or it is not on time. Which is again a default.

The candid: People who have real tight situations and genuine problems to deal with. They pay all the EMI on time but with the unstable condition they cannot repay the complete amount on time.

The smart ones: They love to play around by roaming scot free without paying the EMIs. However, they can mislead the banks with all the fake reasons.

Unable to pay the loan?

Banks do not need collaterals for personal loans; hence they are called unsecured loans. They have a way to deal with the personal loan default cases.

Banks and other financial institutions have a different way of dealing with defaulters.
They can offer negotiations.
If that fails, they could resort to insist the borrower to present a post – dated cheque for clearing.
That in case of vehicle or home loan, banks can issue notices, such as public notice, normal notice and Fair value notice.
If your dues are not paid over 90 days, then the banks will declare you as an NPA.
If not, the personal loan collateral is seized and sale proceeding are initiated.


What the borrower (loan defaulter) can do here? Not much. But if the defaulter thinks that ‘property seizure’ or ‘property fair value’ has not been handled properly, they can raise the objection in written to the bank. The bank is obliged to reply within 7 days. But after the reply, the bank can go ahead and sell the asset as per the public notice issued.