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Different types of loans help you cover varied expenses by bridging financial gaps. Lenders, such as banks and NBFCs, offer loans based on your usage, eligibility and their internal policies. 

You pay interest to enjoy the facility to borrow, so shopping for affordable rates should be your priority when you are looking to borrow. Planning repayment is also key, as not repaying on time can affect your creditworthiness adversely. 

What is a loan and what types of loan options are available in the market?

A loan is a financial product that provides you with funds. It comes with certain terms, where you, as the borrower, promise to repay it with interest over a specified duration of time. 

There are many types of loans that you can get today and they can be classified into two main categories: 

• Secured loans require you to pledge an asset as collateral to get access to credit
• Unsecured loans do not require any security but may have stricter eligibility terms and high-interest charges 

Apart from these, you may come across other loans such as:

• Lines of credit
• Flexi loans
• Loans with fixed or variable interest

These classifications are based on how the amount is disbursed to you as well as the way in which you repay. 

In addition, loans are named based on usage, such as wedding loans or home renovation loans. They may also be named based on the borrower’s profile, such as salary advance loans for salaried professionals. 

Examples of Secured Loans

Now that you have understood how many types of loans there are, here are some examples of popular types of loans that require collateral. 

Home Loans

Home loans are a type of secured loan that provides funds to buy a property or build a house and lenders consider the home you buy or construct as collateral. When you take a home loan, you can get up to 90% of the property’s value as the loan amount. 

Loan Against Property

As its name suggests, you can access funds by pledging your property as collateral. With this loan, you can get a loan amount up to 65% to 85% of the property’s market value. 

Loan Against Mutual Funds/Fixed Deposits 

Such loans allow you to pledge your mutual funds or FD as collateral and get funds for your requirements. Typically, you can get around 50%-60% of the value of MF units as a loan amount or up to 90% of your FD. 

Gold Loans 

You can also leverage your gold jewellery, coins, or digital gold to get a loan. The LTV ratio of this loan generally ranges between 75% and 90%, which means you can get up to 90% of the metal’s market value as the loan amount.

Car loans, bike loans and loans against insurance policies are other examples of secured loans you can get. 

Also Check: Instant Cash Loan

Examples of Unsecured Loans

Here is a look at various types of unsecured loans you can get. They do not require you to risk your assets and may be faster to get as well. 

Personal Loans

These are the most popular lending options that allow you to enjoy instant liquidity. They come with no use-case restrictions, which means you can use the funds freely. Most applicants use these loans to address emergencies and big-ticket expenses. 

 Based on the use case, there are several types of personal loans, including:

• Vehicle loans
• Education loans
• Travel loans
• Medical loans
• Debt consolidation loans
• Home renovation loans
• Consumer durable loans 

Short-Term Business Loans

Entrepreneurs can make the best use of these unsecured loans to set up their business or expand it. Some types of short-term business loans include the following:

• Equipment and machinery loan
• Working capital loan
• MSME loan
• Loan for women entrepreneurs

With this guide, you can take the next step towards bridging financial gaps with ease. Remember to choose a lender who is 100% transparent, has no hidden charges and offers repayment flexibility and easy access via online processes. Get all these advantages and more on Fibe, where you can access a variety of Instant Personal Loans of up to ₹5 lakhs. 

Download the Instant Cash Loan App or log in to our website to get started with a simple and quick digital application. 

FAQs on Different Types of Loans 

What are the four classifications of loans?

The four different types of loans that most lenders offer in India include secured, unsecured, fixed-interest and variable-interest loans. 

What is the most common type of loan?

The most common type of loan you can get access to is a personal loan. 

Which loan is popular in India?

Some of the popular lending options in India include personal, home and gold loans.

Which loan has a high-interest rate?

An unsecured or collateral-free loan generally comes with a higher interest rate as compared to a secured loan.

A flat rate of interest differs from a reducing rate, so before you choose a loan, knowing which is better for you is important. Lenders offer various types of interest rates, and a suitable option can lower your borrowing costs. 

Read on to understand flat vs reducing interest rates. 

What is a Flat Interest Rate? 

A flat interest rate is the rate of interest that remains unchanged through the tenure of the loan. The interest is calculated on the total loan amount at the start of the loan tenure. The financial institution determines the EMI amount and the schedule of repayment. 

In this type of interest rate, the interest calculation remains fixed, helping you plan your repayments better. However, keep in mind that the total interest liability is generally higher for flat rates when compared to reducing rates with otherwise comparable loan terms. 

Check out the flat interest rate formula: 

Flat Interest = (P × R × T)/100 

Where: 

1. P = Principal loan amount 
    

2. R = Annual interest rate in percentage 
    

3. T = Loan tenure in years 

Example of a Flat Interest Rate Calculation 

Suppose you take a loan of ₹1 lakh for 12 months at a flat interest rate of 10% per annum. 

Flat Interest = (₹1,00,000 × 10 × 1)/100 = ₹10,000 

Therefore: 

• Principal amount: ₹1,00,000 

• Total interest payable: ₹10,000 

• Total repayment amount: ₹1,10,000 

• Approximate monthly EMI: ₹9,167 

Under the flat rate method, interest is calculated on the original ₹1 lakh throughout the loan tenure, even as you repay the loan through EMIs. 

What is a Reducing Interest Rate? 

A reducing rate is a type of interest calculation in which the interest component reduces as you repay the loan. This is because interest is calculated on the outstanding principal after each repayment rather than on the original loan amount throughout the tenure. 

As the outstanding principal decreases with each EMI, the interest charged on it also reduces. This can make the reducing balance method more cost-effective than a comparable flat-rate loan. 

Here is the EMI formula for a reducing balance loan: 

EMI = [P × r × (1 + r)ⁿ] ÷ [(1 + r)ⁿ − 1] 

Where: 

• P = Principal loan amount 

• r = Monthly interest rate, calculated as annual interest rate ÷ (12 × 100) 

• n = Total number of monthly instalments 

For example, if the annual interest rate is 10%, the monthly rate (r) would be: 

10 ÷ (12 × 100) = 0.008333 

The EMI under the reducing balance method remains generally fixed for a fixed-rate loan, but its composition changes over time. The interest component decreases while the principal component increases as the outstanding loan amount reduces. 

Also Read: Why Personal Loan Interest Rate is High? 

Difference Between Flat and Reducing Interest Rates 

Flat and reducing interest rates differ mainly in the amount on which interest is calculated. Understanding these differences can help you evaluate the overall cost of a loan before borrowing. 

Parameter	Flat Interest Rate	Reducing Interest Rate
Interest Calculation	Interest is calculated on the original principal amount throughout the loan tenure.	Interest is calculated on the outstanding principal after each repayment.
EMI	The EMI is generally fixed and is calculated by adding the total flat interest to the principal and dividing it across the repayment tenure.	For a fixed-rate loan, the EMI generally remains fixed, but the interest component reduces and the principal component increases over time.
Total Interest Payable	The total interest payable is generally higher because interest continues to be calculated on the original loan amount.	The total interest payable is generally lower for otherwise comparable loan terms because interest is charged only on the outstanding balance.
Loan Tenure Impact	A longer tenure directly increases the total interest because the original principal continues to be used for calculating interest throughout the tenure.	A longer tenure can also increase the total interest payable, but interest is calculated only on the outstanding principal at each stage of repayment.
Suitable For	Borrowers who prefer a simple and predictable method of calculating their loan interest and repayment amount.	Borrowers looking to minimise their total interest outgo, particularly for larger loan amounts or longer repayment tenures.

FAQs on Reducing vs Flat Interest Rates 

1. What is the formula to calculate a reducing rate of interest? 

For a loan that follows the reducing balance method, the standard formula used to calculate the EMI is: 

EMI = [P × r × (1 + r)ⁿ] ÷ [(1 + r)ⁿ − 1] 

Here, P is the principal loan amount, r is the monthly interest rate and n is the number of monthly instalments. 

Under this method, interest for each repayment period is calculated on the outstanding principal. Therefore, as the principal decreases with every EMI, the interest component of subsequent repayments also decreases. 

2. Do banks in India use flat interest rate or reducing interest rate for personal loans? 

Banks and financial institutions in India may use different interest calculation methods depending on the lender and loan product. Personal loans can be offered using either a flat interest rate or a reducing balance interest rate, although reducing balance calculations are commonly used for EMI-based loans. 

Before choosing a personal loan, check whether the quoted rate is flat or reducing. You should also review the Annual Percentage Rate (APR), Key Facts Statement (KFS), EMI amount, applicable charges and total repayment amount to understand the actual cost of borrowing. 

3. Which is better: a flat or a reduced interest rate? 

A reducing interest rate can generally be more cost-effective because interest is calculated only on the outstanding loan balance. As you repay the principal, the interest component also reduces. 

However, the better option depends on the interest rate offered, loan tenure, applicable fees and other repayment terms. Compare the APR and total repayment amount rather than considering only the quoted interest rate before choosing a loan. 

Loan repayment problems can lead to an account being classified as a non-performing asset (NPA) after the applicable overdue period. However, an NPA is not automatically written off or waived. A loan write-off is mainly an accounting action taken by the lender, while a loan waive-off means the lender gives up its right to recover all or part of the amount under specific circumstances or relief measures. 

Although the two terms are often used interchangeably, their effect on the borrower is very different. Read on to understand the loan write-off and loan waiver meaning, how each works, and the key differences between them. 

What Is a Loan Write-Off? 

A loan write-off is an accounting treatment used when a lender considers the recovery of a loan doubtful or difficult. The lender removes the written-off amount from its active loan assets for accounting purposes, but this does not automatically cancel the borrower’s obligation to repay. 

In a technical write-off, the outstanding amount can continue to remain due at the borrower level. The lender may continue recovery efforts, use legally available remedies, or enforce security where applicable. A written-off status can also be reported to credit bureaus and may make future borrowing more difficult. 

What Is a Loan Waive-Off? 

A loan waive-off, or loan waiver, is when a lender gives up its claim to recover all or a specified part of the outstanding loan. Once an amount is validly waived, the borrower is no longer required to repay that waived portion. 

Loan waivers are generally provided only in exceptional situations, such as government-supported relief schemes, natural calamities, severe sector-wide distress, or other circumstances covered by an approved lender or government policy. The exact eligibility, amount waived, treatment of collateral and credit reporting depend on the terms of the waiver scheme or decision. 

Difference Between Loan Write-Off & Waive-Off 

The following table explains the main difference between a loan write-off and a loan waive-off: 

Particulars	Loan Write-Off	Loan Waive-Off
Meaning	The lender removes the loan, fully or partly, from its active assets for accounting purposes because recovery is considered doubtful.	The lender forgives all or a specified part of the loan and gives up its claim over the waived amount.
Borrower Liability	The borrower generally remains liable to repay the outstanding amount even after a write-off.	The borrower is released from repayment of the amount that has been validly waived.
Loan Recovery	The lender can continue recovery efforts and may use legal remedies permitted under the loan agreement and applicable law.	The lender cannot recover the portion that has been waived once the waiver becomes effective.
Collateral	For secured loans, the lender may continue to enforce or realise collateral, subject to the loan terms and applicable law.	Where a full waiver extinguishes the secured debt, collateral is generally released subject to the terms of the waiver scheme and applicable documentation.
Eligibility / Context	A lender may write off stressed or unrecoverable exposures in line with its accounting and recovery policies.	Waivers are usually limited to specific borrowers or situations covered by a lender-approved or government-supported relief measure.
Legal Consequences	A write-off does not by itself end the lender’s recovery rights or the borrower’s repayment obligation.	For the waived portion, the lender gives up the right to recover the amount in accordance with the waiver terms.
Impact on Credit Score	A written-off status is viewed negatively by lenders and can hurt the borrower’s credit profile and future access to credit.	The impact can vary based on how the lender reports the waiver and the terms of the relief scheme. Borrowers should not assume a waiver has no credit-reporting impact.

Reasons for a Loan Waive-Off 

Loan waivers are not routine and are generally considered only under specific relief policies or exceptional circumstances. Common reasons may include: 

• Natural calamities such as floods, droughts or cyclones that severely affect a borrower’s repayment capacity. 

• Government relief programmes for eligible sectors or borrower groups, such as certain agricultural loan waiver schemes. 

• Severe financial hardship covered under an approved lender or government policy. 

• Sector-wide economic distress where a formal relief measure is introduced. 

• Other exceptional situations specifically covered by the terms and eligibility rules of a waiver programme. 

A borrower is not automatically entitled to a waiver simply because repayment has become difficult. Eligibility depends on the applicable policy or scheme. 

Example of a Written-Off Loan 

Suppose Y takes a loan of ₹5 lakh for 36 months and repays the EMIs regularly for one year. Later, due to financial difficulties, Y stops making repayments. The lender follows up and attempts recovery, but the dues continue to remain unpaid. 

After following its internal policies and applicable accounting norms, the lender may write off the outstanding loan in its books. This does not mean Y is free from repayment. The lender may continue recovery efforts and, in the case of a secured loan, may enforce collateral in accordance with the loan agreement and applicable law. 

Example of a Waived-Off Loan 

Suppose farmer X takes a crop loan of ₹1 lakh. After a major flood damages the crop, a government-supported relief scheme announces a waiver for eligible agricultural borrowers affected by the disaster. 

If X meets the scheme’s eligibility conditions and the loan is approved for a full waiver, X would no longer be required to repay the waived amount. The treatment of any security or collateral would follow the terms of the scheme and the lender’s documentation. 

Benefits of Writing Off and Waiving Off Loans 

A loan write-off can offer the following benefits to lenders: 

• Helps lenders present stressed or unrecoverable assets more accurately in their financial statements. 

• Can reduce reported non-performing assets in the lender’s books after the required provisioning and accounting treatment. 

• Allows lenders to continue recovery even after the accounting write-off, since the borrower’s liability is not automatically cancelled. 

• May have accounting or tax implications for the lender, subject to applicable laws, regulations and internal policies. 

A loan waive-off can provide relief to eligible borrowers in exceptional circumstances. Key benefits may include: 

• Relief from repayment of the amount that is covered by the waiver. 

• Reduced financial pressure during severe hardship, natural calamities or sector-wide distress. 

• A chance for eligible borrowers to stabilise essential household, farming or business finances after a major disruption. 

• Closure of recovery obligations for the waived portion once the waiver is validly implemented. 

If you are planning to borrow, choosing a loan amount and EMI that fit your repayment capacity can help you avoid repayment stress. With Fibe, eligible salaried applicants can apply online for a personal loan of up to ₹10 lakh. Interest rates start from 18% p.a. on a reducing-balance basis, with repayment tenure options generally ranging from 6 to 36 months, subject to eligibility and final approval. You can apply through the Fibe app or website. 

FAQs On Difference Between Loan Write-Off and Loan Waive-Off 

1.What is an example of a loan write-off? 

Suppose a borrower stops repaying a loan and the lender considers recovery doubtful after following its recovery process. The lender may write off the outstanding amount in its books. However, the borrower can still remain liable for repayment, and the lender may continue recovery efforts. 

2.What is a waived-off loan? 

A waived-off loan is one where the lender gives up its claim to recover all or a specified part of the outstanding amount under an approved waiver decision or scheme. The borrower is no longer required to repay the portion that has been waived. 

3.What is a waiver of a loan? 

A loan waiver is the cancellation or forgiveness of all or part of a borrower’s outstanding debt. It is generally available only in specific situations and subject to the eligibility conditions of the applicable lender or government policy. 

4.Does a loan write-off affect my credit score? 

Yes. A written-off status is generally considered negative on a credit report because it indicates that the loan was not repaid as agreed. This can lower your creditworthiness and make future loan or credit-card approvals more difficult or expensive. 

5.Can a loan be written off and waived off at the same time? 

They are not the same action. A write-off is an accounting treatment and does not, by itself, cancel the borrower’s debt. A waiver gives up the lender’s claim over the waived amount. However, a loan that was previously written off may later be settled or have some claims waived through a separate approved process or relief scheme. 

A loan overdue means you have missed paying your EMI, interest, principal or any other loan-related amount by the scheduled due date. In simple terms, if your EMI was due on the 5th of the month and you did not pay it by then, that unpaid amount becomes overdue. If the delay continues, lenders may charge penalties, report the delay to credit bureaus and, in serious cases, classify the account as a non-performing asset after the regulatory threshold. 

Even one missed EMI should be taken seriously because repayment history is an important part of your credit profile. Your CIBIL report records details such as current balance, overdue amount, last payment date and up to 36 months of payment history for loan and credit card accounts. 

What is a Loan Overdue? — Overdue Loan Meaning 

A loan overdue is the unpaid amount on a loan that has crossed its repayment due date. This may include: 

• Missed EMI amount 

• Unpaid interest 

• Penal charges or late payment fees 

• Any other lender-approved charges mentioned in the loan agreement 

For example, if your personal loan EMI of ₹8,000 was due on 10 May and you paid it on 18 May, the EMI remained overdue for 8 days. If you miss multiple EMIs, the overdue amount keeps increasing and may attract additional charges. 

Simple definition 

Loan overdue = EMI or loan payment not paid by the due date. 

Lenders may initially send reminders through SMS, email, calls or app notifications. However, repeated delays can affect your credit score and borrowing eligibility. 

How is the Overdue Amount Calculated? 

The overdue amount is usually calculated by adding the unpaid EMI amount, applicable interest, late payment charges and other penalties, if any. 

Basic formula 

Overdue Amount = Unpaid EMI + Penal Charges + Additional Interest + Other Applicable Charges 

The exact calculation varies from lender to lender, so borrowers should always check the loan agreement, repayment schedule and lender communication. 

Example of overdue loan calculation 

Let’s say you have a personal loan EMI of ₹10,000 due on 5 June. 

Particulars	Amount
Missed EMI	₹10,000
Late payment penalty	₹500
Additional interest/penal interest	₹150
Other applicable charges, if any	₹0
Total overdue amount	₹10,650

In this case, you may need to pay ₹10,650 to clear the overdue amount. If you delay further or miss the next EMI too, the overdue balance can increase. 

Important note 

Some lenders may calculate charges as a flat fee, while others may charge a percentage of the overdue EMI or outstanding amount. Always check the schedule of charges before taking a loan. 

Loan Overdue Charges: What Does Your Lender Charge? 

Loan overdue charges are the extra costs a lender may apply when you miss your repayment due date. These charges are not the same for every bank, NBFC or loan app. 

Common loan overdue charges include: 

Type of charge	What it means
Late payment fee	A fixed or percentage-based fee charged when EMI is not paid on time
Penal interest	Additional interest charged on the overdue amount
Bounce charges	Charged if your auto-debit, NACH, ECS or cheque payment fails
Collection charges	May apply in some cases if recovery follow-ups are initiated
Legal or repossession charges	May apply in severe default cases, especially secured loans

Example 

If your EMI is ₹12,000 and your lender charges 2% as a late payment fee, your penalty may be: 

₹12,000 × 2% = ₹240 

So, your payable amount may become ₹12,240 plus any additional interest or bounce charges, if applicable. 

Borrower tip 

Before applying for a loan, check: 

• Late payment fee 

• Bounce charges 

• Penal interest rate 

• Grace period, if any 

• Auto-debit failure process 

• Recovery and collection policy 

This helps you avoid surprises later. 

Outstanding Payments vs Overdue Payments 

Outstanding payment and overdue payment are often used together, but they do not mean the same thing. 

Parameters	Outstanding Payments	Overdue Payments
Definition	The remaining loan amount that is yet to be repaid	The EMI or repayment amount that was due but not paid on time
Payment timeline	Future EMIs	Past missed EMIs
Status	Not necessarily late	Already delayed
Impact on credit score	Can help build credit if paid on time	Can negatively affect credit health
Penalties	No penalty if paid as scheduled	May attract late fees, penal interest or bounce charges
Repayment option	Can be repaid through regular EMIs, prepayment or foreclosure	Should be paid immediately to avoid further consequences

Example 

If your total remaining loan balance is ₹1,20,000, that is your outstanding amount. 

If your last EMI of ₹8,000 is unpaid after the due date, that ₹8,000 becomes your overdue amount. 

Consequences of Not Repaying a Loan on Time 

Missing one EMI may look manageable, but repeated delays can create a bigger financial problem. Here are the major consequences of overdue loan payments. 

1. Reminders and notices from the lender 

Initially, the lender may send payment reminders through SMS, email, phone calls or app notifications. If the dues remain unpaid, the lender may issue a formal notice asking you to clear the overdue amount by a specific date. 

2. Late payment penalties 

Lenders may charge a late payment fee or penal interest on the overdue amount. The longer you delay, the more you may have to pay. 

3. Impact on credit score 

Late payments can impact your credit score because credit bureaus consider repayment behaviour while evaluating your credit profile. CIBIL explains that Days Past Due, or DPD, shows how many days a payment on a loan or credit card account was late in a particular month. Anything other than “000” or “STD” may be viewed negatively by lenders. 

4. Difficulty getting future loans 

A history of overdue payments can make future loan approvals difficult. Even if you get approved, lenders may offer a lower loan amount, higher interest rate or stricter terms. 

5. Damage to credit report 

Your credit report may show overdue amounts, delayed payment history and account status. These details can influence how lenders assess your repayment reliability. 

6. Higher borrowing cost 

A lower credit score may lead to higher interest rates on future personal loans, credit cards, home loans or business loans. 

7. Risk of collateral loss in secured loans 

If the loan is secured, such as a car loan, gold loan or loan against property, continued default may allow the lender to recover dues through the collateral after following the applicable legal process. 

8. Legal action in severe cases 

For unsecured loans, lenders may initiate legal recovery action if the borrower does not repay despite repeated reminders and notices. RBI’s framework also recognises restructuring as a tool where lenders may modify repayment terms for borrowers facing financial difficulty, subject to applicable conditions.  

What is Overdue in CIBIL? How Does It Affect Your Credit Score? 

In a CIBIL report, overdue refers to the unpaid amount on a loan or credit card that has crossed the due date. Your CIBIL report may show details such as: 

• Current balance 

• Amount overdue, if any 

• Date of last payment 

• Payment history 

• Days Past Due, also called DPD 

CIBIL’s report guide explains that account information includes the lender name, type of credit facility, date opened, current balance, amount overdue and month-on-month payment record of up to 36 months. 

What is DPD in CIBIL? 

DPD, or Days Past Due, shows how many days your payment was delayed. 

DPD status	Meaning
000	Payment made on time
STD	Standard account status
30	Payment delayed by around 30 days
60	Payment delayed by around 60 days
90	Payment delayed by around 90 days
XXX	Data not reported by the lender for that month

A clean repayment record with ‘000’ or ‘STD’ is generally better for your credit profile. Repeated late payments can reduce lender confidence and affect your future credit eligibility. 

What is the Difference Between Overdue Loan and NPA? 

An overdue loan and NPA are related, but they are not the same. 

Parameter	Overdue Loan	NPA
Meaning	A loan payment has crossed the due date	A loan account is classified as non-performing after prolonged non-payment
Timeline	Starts after missing the payment due date	Generally applies when dues remain overdue for more than 90 days, depending on loan type and RBI norms
Severity	Early warning stage	Serious default stage
Credit impact	Can affect credit score	Has a much more serious impact on credit profile
Lender action	Reminders, penalties, follow-ups	Stronger recovery action, provisioning and legal steps may follow

RBI’s prudential norms refer to the 90-day overdue threshold for NPA classification in several loan contexts.  

How to Clear an Overdue Loan 

If your loan is already overdue, act quickly. The earlier you resolve it, the easier it is to control penalties and credit damage. 

Step 1: Check the exact overdue amount 

Log in to your lender’s app, website or customer portal and check: 

• Missed EMI amount 

• Late payment charges 

• Penal interest 

• Bounce charges 

• Total payable amount 

• Next EMI due date 

Step 2: Pay the overdue EMI immediately 

If you have the funds, clear the overdue amount at the earliest. This prevents further penalties and reduces the chance of the account slipping into a more serious overdue bucket. 

Step 3: Speak to your lender if you cannot pay fully 

If you are facing a genuine financial emergency, contact your lender before ignoring calls or reminders. Explain your situation and ask whether options such as restructuring, revised repayment schedule or partial payment are available. 

Step 4: Avoid taking multiple new loans 

Taking fresh loans to pay old EMIs can increase your debt burden if not planned carefully. Use this option only after comparing interest rates, processing fees and repayment capacity. 

Step 5: Consider debt consolidation 

If you have multiple overdue payments across loans or credit cards, a debt consolidation loan may help combine them into one EMI. This can simplify repayment, but only if the new EMI is affordable. 

Step 6: Fix your monthly budget 

Cut non-essential expenses temporarily and prioritise overdue repayment. For example, reduce discretionary spends such as shopping, subscriptions or travel until the overdue amount is cleared. 

Step 7: Track your CIBIL report 

After repayment, check your credit report after a reasonable update cycle. If the overdue amount still shows despite full payment, raise a dispute with the credit bureau and lender. 

You can add this section after “Example: How a Missed EMI Can Grow” or before “How to Clear an Overdue Loan”: 

Real-Life Example: How a Loan Becomes Overdue 

Let’s understand this with an example. 

Rahul took a personal loan for a medical emergency. His EMI was ₹9,500, due on the 5th of every month. For the first few months, he paid on time. However, in one month, his salary was delayed, and he did not have enough balance in his bank account on the EMI date. 

Here’s what happened: 

Timeline	What happened
5th of the month	EMI auto-debit failed due to insufficient balance
6th–10th	Rahul received SMS and app reminders from the lender
After a few days	Late payment fee and bounce charges were added
Next EMI cycle	Rahul still had to pay the missed EMI along with the new EMI
If delayed further	The missed payment could reflect in his credit report and affect future loan eligibility

So, instead of paying only ₹9,500, Rahul may now have to pay the missed EMI along with late charges, bounce charges and the next EMI if he delays the payment further. 

This example shows why it is important to clear an overdue EMI as early as possible. Even if you miss the due date due to a genuine reason, paying it quickly can help reduce extra charges and limit the impact on your credit profile. 

Tips to Avoid Overdue Loan Payments 

Avoiding overdue payments is easier than repairing your credit profile later. Here are practical tips to stay on track. 

1. Choose the loan amount wisely 

Do not borrow the maximum amount just because you are eligible. Choose an EMI that fits comfortably into your monthly income. 

A useful rule is: 

Keep your total EMIs within a manageable share of your monthly income, especially if your income varies. 

2. Select the right repayment tenure 

A shorter tenure means higher EMI. A longer tenure means lower EMI but higher total interest. Choose a tenure that balances affordability and total repayment cost. 

3. Set up auto-debit 

Auto-debit can reduce the risk of missing EMI due dates. However, make sure your bank account has enough balance before the debit date. 

4. Maintain an EMI buffer 

Keep at least one EMI amount as a backup in your savings account. This can help during salary delays, emergencies or temporary cash-flow issues. 

5. Track payment reminders 

Use calendar alerts, mobile reminders or lender app notifications to remember EMI dates. 

6. Avoid over-borrowing 

Do not take multiple loans at the same time unless necessary. Too many EMIs can make your monthly budget stressful. 

7. Communicate early with your lender 

If you know you may miss an EMI, contact your lender in advance. Early communication is always better than delayed response after multiple missed payments. 

8. Review your credit report regularly 

Check whether your loan payments are being reported correctly. CIBIL notes that repayment consistency is evaluated through markers such as DPD and account status. 

How to Check Your Loan Overdue Amount Online 

You can check your loan overdue amount online through: 

1. Lender’s mobile app 

Open the loan section and check EMI status, overdue amount and payment options. 

2. Lender’s website or customer portal 

Log in with your registered mobile number, email ID or loan account number. 

3. Monthly loan statement 

Download your statement to view unpaid EMIs, charges and outstanding balance. 

4. SMS or email alerts 

Lenders often send overdue reminders with the payable amount and due date. 

5. Customer support 

Contact the lender’s helpline if you need a breakup of overdue charges. 

6. Credit report 

Your credit report may show overdue amount, current balance and repayment history, but it may not always reflect real-time updates. 

Example: How a Missed EMI Can Grow 

Let’s say your EMI is ₹9,000 and you miss the due date. 

Timeline	What may happen
Day 1–7	Reminder from lender, overdue status begins
Day 8–30	Late fee or penal interest may apply
Day 30+	Delay may start reflecting more seriously in payment history
Day 60+	Credit impact may worsen if unpaid
Day 90+	Account may move closer to NPA classification depending on loan type and lender reporting

This is why paying early, even after missing the due date, is better than delaying further. 

Borrower Rights to Remember 

Even if your loan is overdue, recovery must follow fair practices. RBI’s digital lending directions and broader regulatory framework focus on transparency, regulated lending practices and borrower protection in digital credit. 

As a borrower, you should: 

• Ask for a written breakup of overdue charges 

• Keep payment receipts and lender communication 

• Avoid paying unofficial recovery agents in cash 

• Use official payment channels only 

• Raise a complaint if you face harassment or unfair recovery practices 

Final Takeaway 

A loan overdue is not just a missed EMI; it is an early warning sign that can affect your credit score, increase repayment costs and reduce your chances of getting future credit on favourable terms. The best approach is to clear overdue dues quickly, communicate with your lender if you are facing financial stress and set up systems that help you avoid future delays. 

If you need funds for planned or urgent expenses, choose a lender that offers a transparent digital process, flexible repayment options and easy EMI tracking. With Fibe, eligible borrowers can apply for a personal loan of up to ₹10 lakhs with quick disbursal, no end-use restriction and convenient repayment management through the Fibe Personal Loan App. Download the app or register on the website to get started. 

FAQs on Loan Overdue Payment 

What leads to loans becoming overdue? 

A loan may become overdue due to: 

• Missing the EMI due date 

• Insufficient bank balance for auto-debit 

• Salary delay 

• Job loss 

• Medical or family emergency 

• Poor budgeting 

• Multiple active loans 

• Technical failure in payment processing 

What are the negative effects of a loan overdue? 

A loan overdue can lead to late payment charges, penal interest, lender reminders, credit score impact and difficulty getting future loans. In secured loans, continued default may also put the pledged collateral at risk. 

Does an overdue loan impact my CIBIL score? 

Yes. An overdue loan can negatively impact your CIBIL score because repayment history is a key part of your credit profile. Delays may appear in your report through DPD and overdue amount details. 

What happens if a borrower does not repay a loan? 

If a borrower does not repay a loan, the lender may send reminders, charge penalties, report the delay to credit bureaus and issue formal notices. In secured loans, the lender may recover dues through the collateral after following the legal process. In unsecured loans, the lender may take legal recovery action. 

How can I remove the overdue remark from CIBIL? 

You can address an overdue remark by: 

• Paying the overdue amount 

• Continuing timely EMI payments 

• Checking whether the lender updates the payment status 

• Raising a dispute if the report shows incorrect overdue data 

• Maintaining a clean repayment record going forward 

Correct information generally cannot be removed simply because it is negative. However, incorrect or outdated reporting can be disputed with the lender and credit bureau. 

How do I check my loan overdue amount online? 

You can check your overdue amount through your lender’s mobile app, website, loan statement, email alerts, SMS reminders or customer support. You can also review your credit report, but lender portals are usually better for real-time payable amounts. 

What is the difference between overdue loan and NPA? 

An overdue loan is a loan payment that has crossed its due date. An NPA, or non-performing asset, is a more serious classification generally applied when dues remain unpaid for over 90 days, depending on the type of loan and applicable norms. 

What are the loan overdue charges I will have to pay? 

You may have to pay late payment fees, penal interest, bounce charges, collection charges or other applicable fees. The exact charges depend on your lender’s schedule of charges and loan agreement. 

Is one missed EMI a serious issue? 

One missed EMI may not become a major issue if you pay it quickly. However, it can still attract late fees and may affect your repayment record if reported. Repeated missed EMIs are more serious and can harm your credit profile. 

Can I get another loan if I have an overdue EMI? 

It may be difficult to get another loan with an active overdue EMI. Lenders usually prefer borrowers with clean repayment records. Clear your overdue amount first and maintain timely payments before applying again.