What can you do if you have defaulted on your personal loans? Experts explain
“A loan, though old, is not a gift" is an old Hungarian saying. This is especially apt in today’s digital age where even a minute delay is reported into the system and is remembered by lenders and others for a very, very long time.
Word to the wise – do not think of sweeping your loan (if defaulted) under the carpet and make sure that your lines of communication with your lender are prompt and concise.
“A settlement (of a loan) is when you negotiate with the lender to pay less than the outstanding balance," explains Adhil Shetty, CEO, BankBazaar.
Essentially, this means you’re paying less than the amount originally agreed upon with the lender.
In such situations, the lenders report this to credit bureaus as a «settled» debt instead of a «paid in full» debt. Settled accounts imply a failure to fulfil the original credit agreement fully and indicate that the lender did not receive all the money they were owed.
So credit bureaus generally view a settlement negatively and as a result, a settlement can lower your credit score. That your loan is turning bad is something that needs to be factored in in today’s changing financial world.
“Personal loans have become increasingly popular among customers today as they eliminate the need to rely on others for financial support," says Mayank Khera, Co-founder and Chief Operating Officer, Credgenics.
In today’s evolving world, the convenience of having anytime, anywhere access, minimal paperwork, and quick disbursement of loans has further fuelled the demand forpersonal loans.
Several banks, NBFCs, and FinTechs provide personal loans to meet customers' increasing financial requirements, including various short-term needs like purchases, medical emergencies, travel expenses, education,
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