Loan Settlement Support
Loan Settlement Support is a financial assistance service that helps borrowers negotiate and settle outstanding loans with banks or financial institutions when they are unable to repay the full amount due to financial hardship.
Types of Loan Settlement Support
Below are the main types
Personal Loan Settlement Support
For individuals unable to repay personal loans due to job loss, medical emergencies, or other financial crises.
Credit Card Loan Settlement Support
Helps credit card holders settle overdue balances or accumulated interest through negotiation with banks.
Business Loan Settlement Support
For entrepreneurs and MSMEs facing cash flow problems or business losses.
Home Loan / Property Loan Settlement Support
Offered to borrowers struggling with EMIs on home or mortgage loans.
Vehicle / Auto Loan Settlement Support
For individuals or businesses unable to repay car, bike, or commercial vehicle loans.
Education Loan Settlement Support
Designed for students or parents who cannot continue repayments due to unemployment or financial distress.
Why Is Loan Settlement Support Important?
Prevents Legal Action
Helps borrowers avoid loan recovery proceedings or asset seizure by settling debts amicably.
Reduces Financial Stress
Provides relief to individuals and businesses unable to meet repayment obligations.
Avoids NPA Classification
Timely settlement prevents loans from being tagged as Non-Performing Assets (NPAs), protecting the borrower’s reputation.
Improves Financial Recovery
Enables individuals and businesses to clear old dues and restart financial planning without long-term burden.
Protects Borrower Rights
Settlement support ensures borrowers are treated fairly and within RBI’s legal framework.
FAQs
What is Loan Settlement Support?
Loan Settlement Support is a negotiation service that helps borrowers close outstanding loans by paying an agreed portion of the dues to the lender.
How does a loan settlement work?
The borrower or settlement advisor negotiates with the bank to pay a lump sum or phased amount (less than the total due) to close the loan legally.
What is a One-Time Settlement (OTS)?
OTS is a lender-approved process where borrowers clear their outstanding dues by paying an agreed amount (usually 60–80% of the total) within a set period.
Will a loan settlement affect my credit score?
Yes. A settled account is marked as “settled” (not “closed”) in credit reports, which can lower your CIBIL score temporarily.
What types of loans can be settled?
All secured and unsecured loans including personal, business, home, vehicle, and credit card loans can be settled under approved terms.