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A bad loan is always a problem for both the lender and borrower. Failure to pay off your personal loan could lead to series of consequences.
When you default on your personal loan, your credit score takes a hit at first when the creditors report it to the credit bureaus. After few months, it might appear as written-off on your credit report. This is considered a negative account.
You may be notified by the lenders for the first three months about the defaults. If you are going through an economic crisis, the lender may ask you to settle the loan for the amount lower than borrowed. The lender may also push for legal proceedings which you will have to deal at the court.
Future loan eligibility gets affected big-time. No lenders will be willing to lend to you with the negative track record of payments.