What happens when EMI is overdue?
When an EMI becomes overdue, the lender marks the account as delinquent after the grace period. Late payment charges and penal interest start accruing, increasing the outstanding loan amount. Continued non-payment may trigger reminder calls, SMS alerts, and emails. If delays persist, the overdue status is reported to credit bureaus such as CIBIL, negatively impacting your credit score. This can reduce future loan eligibility, lead to higher interest rates, and complicate processes such as loan foreclosure or balance transfer.
Loan foreclosure policy with overdue EMI
- Loan foreclosure is usually permitted only after all overdue EMIs, interest, and penalties are cleared
- Lenders may block foreclosure requests until the account is regularised
- Foreclosure charges, if applicable, are calculated on the outstanding principal
- Penal interest continues to apply until overdue amounts are settled
- Policies differ based on loan type and lender guidelines
- Some lenders require written consent or additional verification for overdue accounts
Stepwise process to foreclose a loan with overdue EMI
- Check the exact overdue amount, including EMIs, penal interest, and late fees
- Pay and regularise all pending EMIs to bring the account to “active” status
- Request a foreclosure statement from the lender or via the customer portal
- Review the statement for principal outstanding, charges, and foreclosure fees
- Make the full foreclosure payment through approved modes
- Collect acknowledgement, loan closure letter, and No Objection Certificate (NOC)
Charges, penalties, and additional costs
Cost component |
Description |
Late payment charges |
Fixed fee or percentage applied per missed EMI |
Penal interest |
Extra interest charged on overdue amount |
Foreclosure charges |
Applicable on outstanding principal, as per policy |
GST |
Levied on applicable fees and charges |
Documentation charges |
May apply in select cases |
How to regularise overdue EMIs before foreclosure
- Pay all pending EMIs along with penalties in one transaction
- Use online customer portals or bank branches for faster updates
- Confirm account status after payment reflects as regular
- Request a revised loan statement post-regularisation
- Maintain proof of payment for future reference
Policy differences for loan types (personal/home/auto)
Loan type |
Foreclosure with overdue EMI |
Personal loan |
Usually requires full regularisation before foreclosure |
Home loan |
Stricter checks; foreclosure allowed after overdue clearance |
Auto loan |
Overdues must be settled; hypothecation closure required |
Consequences for credit score and CIBIL report
Overdue EMIs are reported to credit bureaus and can significantly reduce your credit score. Even after foreclosure, delayed payments may remain on your CIBIL report for several years. This history can affect future loan approvals, credit card eligibility, and interest rates offered by lenders.
Required documents for foreclosure with overdue EMI
- Loan account number
- Identity and address proof
- Foreclosure request form
- Payment receipts for overdue EMIs
- Bank statements, if required
Tracking your foreclosure & repayment status
You can track repayment and foreclosure status through the lender’s online customer portal, mobile app, or customer care. Updates usually reflect within a few working days after payment. Always download the loan closure confirmation and NOC once foreclosure is completed.
Escalation options if foreclosure request is delayed
- Raise a service request through the official customer portal
- Contact customer care with request reference details
- Email the lender’s grievance or nodal officer
- Escalate to the banking ombudsman if delays persist beyond timelines
