Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs

SUPPORT

Menu  
 
Apply Now
Apply Now

Tata Capital > Blog > Overdue Payment: What It Is and How It Impacts Your Finances

Personal Use Loan

Overdue Payment: What It Is and How It Impacts Your Finances

Overdue Payment: What It Is and How It Impacts Your Finances

With the pandemic still atop the biggest concerns of the world right now, paying back your dues on time has probably been challenging. Especially with salary cuts, slow business operations, unexpected expenses, and emergencies, the blow has been particularly tough to bear for many. However, delaying your credit dues will only add to your misery further. From racking up interest rates to late payment charges, it’s not an easy place to be.

In such a scenario, the simplest and quickest way to tackle the situation is to avail of an instant personal loan. Here’s why.

What is the Overdue Amount on the Loan?

A loan is considered overdue when the borrower misses the scheduled repayment date. In simple terms, loan overdue meaning is thatthe EMI or installment wasn’t paid on time.

There are several reasons why this might happen-

  • The borrower may be facing a financial crisis, such as a job loss.
  • Some borrowers forget the due date, especially when they have multiple bills to manage.
  • Others may delay payment intentionally due to dissatisfaction or a dispute.
  • In some cases, a payment might fail because of technical issues, like a failed transaction or a delay from the bank’s side.

Also, read – What are Penal Charges?

Understanding the Loan Overdue Process: Grace Periods & Penalties

Understanding how the overdue process works can help you manage delays better and avoid heavy costs.

Late Fees and Penalties

If you miss your EMI due date, the lender adds loan overdue penalties, such as late fees or extra interest. These charges discourage delays and cover the lender’s losses.

Grace Period

Some lenders offer a loan grace period, which is a short extension during which you can pay without heavy penalties. This is usually given when you inform the lender early about your delay.

Impact on Credit Score

If your EMI is late by more than 30 days, the lender reports it as ‘Days Past Due.’ This record stays for years and can lower your credit score.

Legal Action

If your dues are unpaid for over 90 days, the lender can issue legal notices or take court action.

Also, read – Consequences Of Missing Home Loan EMIs

Difference between Overdue and Outstanding Payments

Some people often confuse whatan overdue amount in a loan is with outstanding payments, but they’re not the same. The table below outlines the key differences between the two.

Aspect Outstanding Payment Overdue Payment

MeaningThe amount that is yet to be paid but still within the due dateLoan overdue meaning isthe amount that has not been paid after the due date has passed  
Due datePayment is pending, but not latePayment is late and past the due date
Late feesNot applicable if paid on timeMay attract late fees or penalties
UrgencyLess urgent, as the due date hasn’t arrived yetRequires immediate action to avoid further consequences
Common examplesUpcoming EMIs, bills, or invoices due next weekMissed credit card bill, EMI, or utility payment that was due a few days ago

What are the Effects of an Overdue Payment?

In case a borrower fails to clear scheduled payments, it can have severe consequences.

  • Late fees- If you have several unpaid EMIs, lenders may charge late fees. These fees are usually a small percentage of the overdue amount and can quickly add up, increasing the total balance owed.
  • Damage to credit score- Your payment history directly affects your credit score. Missing a payment can lower your score, which could impact your ability to qualify for mortgages, loans, or credit cards. A lower score may also result in higher interest rates on future credit applications.
  • Legal action and debt collection- If payments remain overdue for an extended period, lenders may start collection calls or even take legal action to recover the debt.
  • Increased interest rates- Lenders may raise the interest rate on your loan as a penalty for overdue payments, increasing the total cost of the loan and making it more difficult to repay.
  • Restricted access to future credit- A history of late payments can reduce your ability to secure credit on favourable terms in the future. It may also take time to remove the overdue mark from your credit report, so it’s best to avoid it.

Also, read – Things You Should Know About Late Credit Card Payment

Steps to Clear Your Overdue Loan Amount

When you miss a loan EMI, lenders follow a standard process to handle delays. Knowing how to clear overdue loan amounts can help you manage overdue EMI without stress or penalties. Here’s what you should know:

Check Your Finances

List all overdue loans and credit card bills, note interest rates, and review your income and expenses. This helps you decide whether you need debt restructuring or a new loan to clear dues.

Research Lenders

Once you know what your total overdue amount is, look for lenders who can help you clear it. Compare them based on interest rates, fees, and terms. Some may offer loan settlement options if the overdue amount is high.

Apply for the Loan

After selecting the right lender, share your personal, income, and bank details with them. Make sure to read the agreement carefully before signing it.

Clear Dues

Use the loan to pay overdue accounts and follow your new repayment schedule to avoid future delays.

Also, read – What are Finance Charges in Credit Cards?

Loan Overdue Impact on Credit Score & Future Borrowing

An overdue loan can have a huge impact on your financial health, including your credit score and future loan eligibility. Here’s how:

Credit Score Impact

Lenders report every missed or delayed EMI to credit bureaus. While one late payment doesn’t do much harm, repeated delays or a 3-month overdue loan can reduce your overdue loan credit score. This can further affect your future loan eligibility and overdue chances.

Interest Penalties

Lenders add extra interest on the overdue amount on the loan. Whether you miss one EMI or several, this penalty increases your total repayment and is visible as a credit report overdue impact.

Difficulty Getting New Credit

A poor credit report makes it harder to get new loans or credit cards. Even if you do obtain credit, it may be at higher rates or tighter terms.

Also, read – What is an EMI Bounce Charge and Why Does it Matter?

How to Avoid Overdue Payments?

Here are a few ways to stay on top of your loan repayments and avoid overdue payments:

  1. Set up automatic payments: Enable auto-debit or automatic payments so that your EMIs are paid on time each month. This takes the pressure off remembering due dates and helps you avoid missed payments.
  2. Prioritise loan repayments: Make repayments of loans a priority in your financial planning. Paying off loans on time should be one of your top financial commitments to avoid penalties and long-term consequences.
  3. Stay in touch with your lender: If you’re facing financial difficulties and can’t make a payment on time, inform your lender in advance. They may be able to offer some flexibility, such as extending the due date or adjusting your repayment terms.

But if you already have overdue payments, start by assessing your current financial situation to see how much you can pay immediately. Another option is to apply for a personal loan. A personal loan can help you clear overdue payments through debt consolidation. If you have multiple pending dues, you can combine them into one loan and repay the EMIs more easily.

At Tata Capital, we offer personal loans with high loan amounts, attractive interest rates, and flexible repayment tenures. You can also utilise our personal loan EMI calculator to estimate your monthly installments and plan your budget more effectively.

To apply for a personal loan, visit our website or download our app today!

Get an Instant Personal Loan for all your needs !

Apply now
Popular Searches
Term Loan Personal Loan for Government Employee Personal Loan for Salaried What is Personal Loan Personal Loan Prepayment Personal Loan Application Process 3 Lakh Personal Loan 4 Lakh Personal Loan 6 Lakh Personal Loan 7 Lakh Personal Loan 8 Lakh Personal Loan 9 Lakh Personal Loan
More About Loans
Instant Personal Loan personal loan emi calculator personal loan interest rate personal loan eligibility Marriage Loan Document Required for Personal Loan Home Renovation Loan Medical Loan Personal Loan Balance Transfer 5 Lakh Personal Loan Small Personal Loan Travel Loan Personal Loan for Women 2 Lakh Personal Loan 10 Lakh Personal Loan

FAQs

How late can you be on a personal loan payment?

Lenders usually offer a short grace period after the due date. However, if the payment isn’t cleared within that time, late fees and other penalties may start to apply.

Can I go to court for not paying my personal loan?

If personal loan payments are missed over an extended period and recovery efforts fail, the lender can file a case in civil court to recover the dues.

How bad is a late loan payment?

A late loan payment can negatively affect your credit score and attract late fees. If the delay continues, it may impact your loan eligibility in the future and result in collection calls or legal notices from the lender.

How do I settle an overdue loan?

A smart way to clear overdue payments is through debt consolidation. With this option, you can use personal finance to merge all your existing debts into one, which you can then repay through manageable EMIs.  

What is the difference between an overdue amount and an outstanding amount in a loan?

The outstanding amount is the total loan you still have to repay. The overdue amount, on the other hand, is a missed EMI that you didn't pay on time.

How long do late repayments stay on my credit report in India?

Yes, many people take a new loan to pay off overdue EMIs. But check the interest rate and make sure you can manage the new repayment before taking another loan.

Can I take another loan to clear my overdue amount?

Penal interest is an extra charge the lender adds when you pay late. It is usually a higher interest rate applied only to the overdue amount.

 

Disclaimer

Most Viewed Blogs

Trending Blogs

Calculator

Personal Loan EMI Calculator

Personal Loan EMI Calculator
Home Loan EMI Calculator

Home Loan EMI Calculator
Business Loan EMI Calculator

Business Loan EMI Calculator
Used Car Loan EMI Calculator

Used Car Loan EMI Calculator
Two Wheeler Loan EMI Calculator

Two Wheeler Loan EMI Calculator
Loan Against Securities Calculator

Loan Against Securities Calculator
Loan Against Property Calculator

Loan Against Property Calculator
More Tools
Our Subsidiaries
Our Private Equity Funds

Useful Links and Resources

Policies, Codes & Other Documents

Tata Capital Solutions & Services

Uh oh, something went wrong

Please try again later.

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download