Long Term Debt- EMI is a long term debt as one has to pay the installments till they finish paying off the principal amount. Some loans such as home loans can to be paid for as long as 20 years. In such cases, the user is bound by these loans for a long period of time restricting his freedom to buy other luxurious items. Moreover, the payee ends up paying more than the principal amount he requested for due to the interest rates levied on them.
May Not Have Early Payment Option- Most banks that propose EMI schemes do not offer an early payment option even if the payee can afford to pay the principal amount early. This can prove to be setback for the payee as he/she will end up paying more than the principal amount due to the interest charges though he has the money to end this process all at once.
Serious Consequences- Skipping an EMI may lead to various grave consequences like repossession of the purchased item, foreclosure, penalties and strict legal action. Many banks that offer EMI schemes observe strict regulations regarding skipping of EMIs. Consumers are suggested to read the terms and conditions before applying for such schemes to avoid losing the mortgaged item or facing legal actions which will cause more problems.