EMI mandate for loans: What borrowers should know

With the multiple financial responsibilities piling up, it gets difficult to keep track of various payments. Due to this, you don’t want to be in a position where you are financially capable but still miss your loan EMIs. This is where a facility like an EMI mandate comes to your rescue. It provides an automated direction to your recurring and crucial payments.  Learn what it entails and how to leverage it for the best loan repayment experience.

What does an EMI mandate mean? 
 

An EMI mandate is a permission you give to the lender via your bank to auto-debit your loan EMI on a fixed date every month. Once you set up the instruction, you eliminate the hassle of remembering the due date or going through the manual process of initiating a transfer every month. The EMIs are debited in the background, as long as you have sufficient balance in your account.

As the EMI mandates are mostly digital today, you can quickly authorise them through the banking or digital payments app on your smartphone. You can also make changes to the set mandate any time, just as conveniently. It adapts to your needs and simplifies loan payments to let you stay consistent, without much effort.

How the auto-debit feature works 
 

Once your EMI mandate is all set up, the auto-debit of loan repayments progresses in the following way:

1. Scheduling
 

Your EMI debit is scheduled for an automated debit on a fixed date every month based on the mandate you’ve authorised. This date stays consistent throughout the loan tenure unless you request a formal change.

2. EMI collection on due date
 

On the scheduled day, the lender will debit the EMI directly from your bank account linked to the EMI mandate.

3. Confirmations via alerts
 

You get SMS or email alerts in real-time when the EMI amount is debited from your account. This helps you successfully track your payments and manage your monthly budget.

4. Easy updates
 

If you need to switch bank accounts, change the fixed date, or make any other changes to your auto-debit EMI, you can do so conveniently online. Make sure to time it such that your loan repayments continue smoothly.

Changing your EMI bank account 
 

If you’re changing your bank account and want to carry on the EMI mandate from there, you can do so easily via these steps: 

• Cancel or modify the existing EMI mandate

You can cancel or modify the existing EMI mandate through the lender’s app, website, or customer support, if available. In case of FIRSTmoney personal loan, you can choose the EMI date between 3rd to 8th of a month before applying. Hence, there is no option to change it later. However, in case you withdraw a second time, you can choose the EMI date as per your preference from the given options.

• Set up a fresh mandate with a new bank account

When you initiate changes, you are essentially creating a fresh mandate with new rules. You must authorise the new rule just as you did the first time.

• Mind the time to switch bank accounts

Changing the bank account or the date of auto-debit right before the EMI is scheduled can cause a hindrance in meeting the due date. You want to time such updates practically to avoid any issues with regular EMI payments.

Mandate update timelines 
 

When you update your EMI mandate to change the bank account or switch up the date, the modification may take a bit of time to reflect, depending on the mode you use. 

Either way, you get alerts of the progress for easy monitoring. Track if the payment is processed for the next EMI post the update via the mobile banking app.

Common EMI mandate failures and solutions 
 

While automating your EMI payments gives you the peace of mind, it’s important not to completely ignore checking on its consistency. Spot these errors in time to avoid missing your EMIs:

• Insufficient balance on the due date

This is one of the common reasons for missing the EMI payment. Make sure to maintain a buffer in your account specifically for EMIs.

• Technical glitches

Sometimes, occasional system issues can either delay or block your auto-debits. It’s important to keep track of your EMI payments to notice when this happens.

• Pending approval on activation

If you’ve freshly set up the mandate, it may take some time to get processed. If the activation is close to the due date, you may miss the due date. In such cases, doing a manual payment is a good save.  

• Expired or cancelled mandate

Some mandates, without your realisation, may get cancelled or expire. Regularly checking for such issues and reauthorising helps keep your EMIs running smoothly.

• Account freeze or partial restrictions

Sometimes, banks restrict your account due to invalid KYC, compliance checks, or a lack of activity, etc. When this happens, the EMI debit won’t go through. Resolving such issues quickly is critical.

Final words 
 

Setting an EMI mandate is the best way to manage loan repayments. It allows you to consistently repay without having to consciously worry about the due dates. The entire process is automated for your convenience. You simply have to maintain a sufficient account balance and ensure the EMIs are getting processed smoothly. Fix any errors as soon as you notice them. Also, make updates thoughtfully so they don’t hinder the continuity of EMI payments.