Taking a personal loan is an easy way to get financing, but it comes with responsibility. Sometimes, it is possible that you may find it difficult to keep up with timely payments. In such cases, you may think about doing a settlement.
It is an arrangement between you and the lender to pay off the loan amount for less than the total amount owed. Treat this only as a last report, as it can adversely affect your creditworthiness. Read on to know everything about the process involved if you want to settle a personal loan.
You may find it difficult to pay your loan EMIs if you are facing financial difficulties due to:
In such cases, you can negotiate to repay for less than the amount you owe.
Here is the step-by-step process to decide whether loan settlement is the right option and then opt for it.
Evaluate your financial situation to decide if it is the right option and if you are capable of repaying in a lump sum.
As loan settlement should be your last option, consider any other options for repaying your loan before opting for it.
If it is your only option, contact your lender by visiting the nearest branch with all your documents.
Upon contacting the lender, decide on favourable terms to repay your loan, including settlement amount and penalties.
Once you have decided on the term, make a one-time payment to close the loan account.
It’s important to check your credit report and score periodically after loan settlement for any discrepancies.
Here are a few steps to negotiate a settlement with your lender.
Be prepared to explain the reason and prepare the right documentation to support your claim. Also, assess your current finances and calculate the amount you can pay to settle the loan.
Explain your situation to the lender and provide proof. Ask for a settlement offer and make a counteroffer based on your finances.
Once you receive a settlement offer, negotiate the terms to ensure they suit your budget. Be prepared to offer a lump sum payment for a lower payoff amount.
Upon reaching an understanding, get the terms in writing. Review the agreement carefully, ensure that you understand the terms and conditions and sign it.
After signing the agreement, make the payment as soon as possible to avoid any additional charges. This helps you close the loan account permanently.
Negotiation can be challenging, but with careful planning, you may be able to reach a mutually beneficial agreement with your lender.
Take a quick overview of a few reasons to settle personal loan.
Now that you know its benefits, here are a few ways in which this may affect you.
A personal loan settlement can have a negative impact on your credit score, as it indicates that you were unable to repay the loan as agreed. This can stay on your report for a long time, keeping you from getting an affordable loan in the future.
Loan settlement can reduce your monthly loan payments and make it easier to manage your finances.
With a one-time payment, you can eliminate paying more EMI or defaulting on payments, which also eliminates penalties.
It’s necessary to know how to negotiate personal loan settlements in case you ever need it. However, it is best to take loans only after proper planning and consideration.
With Fibe, you can use the loan EMI calculator to make this task easier and repay comfortably. What’s more, you can close your Fibe Instant Personal Loan early without any penalty. So, the next time you need instant cash, simply download our Personal Loan App or register on our website to apply.
Yes, negotiating for a settlement can have a negative impact on your credit score. However, it can help you reduce your debt burden.
To settle personal loan, contact your lender and negotiate a settlement offer once you consider your finances.
The best terms for a personal loan settlement are ones that relieve your finances rather than strain them. You can also take the help of a credit or financial advisor to plan out the ideal terms.
Yes, it is a good idea to settle a personal loan early to save money on interest dues and reduce your overall debt burden.
Yes, face-to-face loan settlement gives you better power to negotiate and understand the terms. This helps you make an informed decision.