Bajaj Finance Loan Settlement is an option that proves useful for those who are unable to repay their loan installments on time due to some reason. Sometimes situations arise in life – like job loss, business loss or serious illness – due to which it becomes difficult to repay the loan EMI. In such a situation, loan settlement can become a practical solution.
First of all, you should get complete information about the current status of your loan – how much principal is left, how much interest is there, and how much penalty has been charged. After this, contact the customer care center of Bajaj Finance and explain your situation honestly. If the company finds your case legitimate, they will give you a settlement offer, in which they propose to close the loan account by taking a lesser amount.
After this, if you accept this offer and repay the stipulated amount on time, you should get a No Dues Certificate (NOC). This is proof that you have fulfilled all your liabilities.
Taking a loan has become a common thing in today’s time. Whether it is to build a house, buy a car, or bear the expenses of children’s education, people take different types of loans to fulfill all these needs. Bajaj Finance is a well-known non-banking financial company (NBFC) of India, which provides many facilities like personal loans, home loans, business loans, and consumer durable loans. But sometimes it happens that a person’s financial condition suddenly deteriorates, and he is unable to repay the loan installments on time.
If o too aarenot able to pay the EMI of your Bajaj Finance loan on time due to any reason, then there is no need to panic. There is an option for this – “Loan Settlement”. This is a solution in which the lender and the borrower decide to settle the loan by taking a lesser amount by mutual consent. That is, if you had taken a loan of ₹ 1,00,000 and now the loan can be ended by paying ₹ 80,000 or less, then this is called Loan Settlement.
Loan Settlement certainly seems to be an easy way, but it also has some disadvantages. The biggest disadvantage is that it has a bad effect on your CIBIL score (credit score). Whenever you try to take a loan from a bank or NBFC in the future, this loan settlement record may come to front fore and there may be a problem in getting the loan approved.
In today’s article, we will know in detail what is the right way to do loan settlement from Bajaj Finance, what documents are required, what things are important to keep in mind and what mistakes you should avoid.
It is a financial process in which the bank or financial institution allows the loan taker to settle the loan by paying a lesser amount instead of the entire outstanding loan amount. This facility is for those who are unable to repay their loans on time and are continuously defaulting.
Under a settlement, the bank can agree on a lump sum amount, which closes the loan. However, it is important to note that settling the loan can affect your CIBIL score, making it difficult for you to get a loan in the future. Therefore, it should be adopted only as a last option.
When a person is unable to pay the EMI of his loan on time and the outstanding amount accumulates over a long period, the bank or financial institution offers the option of loan settlement. In this, the bank allows the customer to pay a discounted amount instead of the entire outstanding amount, thereby settling the loan matter.
The process of settlement comprises discussions between the bank and the customer, wherein the bank assures that the customer can’t pay the entire loan amount. Thereafter, the bank issues a single-payment offer, which is typically lower than the outstanding loan balance. On the payment of this settled amount by the customer, the bank marks the loan as “Settled”. Yet, this is not good for the CIBIL score since it is not treated as a “Complete Payment”.
Hence, loan settlement should be opted for as a matter of last resort, and if at all possible, loan repayment schemes, loan restructuring, or alternative financial solutions must be opted for so that the credit rating is not impacted.
The following documents are required:
If you want to apply it online, then follow the easy steps given below:
Visit the bank’s website or app.
Check the customer support section.
Fill out the request form for the settlement.
Upload the required documents.
Submit and wait for the bank’s response.
Read the bank’s offer.
Make payment
Although both Loan Settlement and Credit Card Loan Settlement aim to provide relief to the borrower, there are some important differences between them.
| Points of Difference | Loan Settlement | Credit Card Loan Settlement |
| Type | Settlement of any type of loan (personal, home, car, education, etc.) | Settlement of Credit Card dues only |
| Settlement Process | The bank fixes a lump sum amount, on payment of which the loan gets settled. | The credit card company settles the amount at a fixed rate. |
| Impact on CIBIL score | CIBIL score may drop by 50-100 points, and it may become difficult to get a loan in the future | There is a huge impact on the CIBIL score, and it may be difficult to get a new credit card. |
| Possibility of getting a loan in the future | You may face problems in getting a home loan, a car loan, or any other loan. | Credit card companies may refuse to issue the card. |
Loan Settlement has a direct and negative impact on your CIBIL score. When a person takes a loan from a bank or NBFC and is unable to repay the entire amount due to some reason, the bank gives him a chance to make a settlement, which is called a Loan Settlement.
However, there is a huge difference between a Loan Settlement and a Loan Closure. If you close your loan by repaying its full amount, it is recorded as “Closed” in your credit report, which improves your CIBIL score. But if you have some amount of the loan waived off under an agreement with the bank, it is reported as “Settled”, which can harm your credit score.
If you have settled the loan and now want to improve your CIBIL score, then you can take the steps given below:
Here are some important points to consider that will help you choose the right Loan Settlement service:
Check the service provider’s credentials.
Before hiring a settlement service, make sure that the service provider you are hiring is registered and certified with financial institutions and banks. Only a reliable service provider can provide you with the right guidance and support. Checking online reviews and customer feedback is a good way to do so.
Check the service charges and other expenses.
Many service providers also charge a service fee, but make sure that the charges are not high and there are no hidden costs. Negotiate with the service provider beforehand about which services are free and which you will have to pay extra for.
Customer support and communication
A good service provider will always stay in touch with the customer and resolve their problems properly. Make sure they answer your questions quickly and are ready to work with you in any difficult situation.
Join our service
If you are also trapped in the debt trap and are facing a financial crisis, and want to adopt the path of Loan Settlement, then you can apply for our Loan Settlement service. We will help you settle your loan. Along with this, we provide you relief from the burden of the loan within 6 – 8 months. If you want to get more information about our service, then you can contact us.
The time taken for the settlement process also depends on various factors, such as the policies of your bank or lender, the outstanding amount, and the communication between the two of you. Usually, this process can take from 1 to 3 months.
The first action in the process of settlement is to approach the bank, where you tell your problem and payment status to the bank. Then, the bank proposes a settlement offer according to your situation. In case you agree with that proposal, you need to pay the amount to the bank within the agreed time. The bank indicates the loan as settled, and this would take some time.
The longer this entire process continues, the more it can impact your CIBIL score, so it is preferable to resolve the issue sooner.
It has the following advantages and disadvantages:
Advantages
Disadvantages
1. Get accurate information about your outstanding loan
First, find out how much is outstanding on your loan – principal, interest, penalty, etc.
2. Contact customer care
Contact Bajaj Finance customer care or visit your nearest branch. Tell them your current situation honestly, like job loss, business loss, or medical emergency.
3. Submit a Settlement Request
You have to submit a Settlement Request through a written application or email, in which you have to write your loan account number, reason ,and your current financial situation.
4. Wait for the Settlement Offer
If Bajaj Finance finds your situation reasonable, they will give you a Settlement Offer in which they will tell you how much amount they are willing to pay to close the loan.
5. Pay the Settlement Amount
If you accept the Settlement Offer, pay that amount within the stipulated time. Note, this may have to be paid in one go or installments.
6. Make sure to get a No Dues Certificate (NOC)
After the payment, make sure to get a No Dues Certificate in writing from Bajaj Finance. This will be proof that you no longer have any dues.
Settle only when there is no other way.
Check the options of EMI Holiday or Loan Restructuring first.
Always do the settlement process with documents.
Keep a complete record of the payment.
So far, you have learned what Loan Settlement is, how it is done, and what the important things related to it are. Now let’s understand its conclusion simply, so that you can understand the depth of the whole topic well.
First of all, it is important to understand that taking a loan is a financial responsibility, and repaying it on time should be our priority. But sometimes such situations arise in life when it becomes difficult to repay the loan. Such as losing a job, suffering a loss in business, or facing a medical emergency. At such a time, if you are not able to pay EMI continuously, then the burden of interest and penalty keeps increasing on you.
In this situation, loan settlement comes forward as a relief option. This is a way in which you and Bajaj Finance agree together, so that you can get rid of the loan by paying a lesser amount. However, this should be the last option because it directly affects your credit score, i.e., CIBIL score.
Que: For how long does the entry of Loan Settlement remain in the CIBIL report?
Ans: The information of Loan Settlement remains in your CIBIL report for 7 years, which may make it difficult to get a loan and credit card during this time.
Que: Do all banks offer the option of Loan Settlement?
Ans: No, not all banks offer the option of Loan Settlement. It depends on the policy of the bank and the status of your loan. Some banks use it only as a “Last Resort”.
Que: Can I get a credit card after the Loan Settlement?
Ans: This can be difficult as banks consider settlements as a negative mark. However, you can take a secured credit card (a card based on a Fixed Deposit) and gradually improve your credit history.
Que: Can I get the Loan Settlement removed from the CIBIL report?
Ans: Generally, Loan Settlement entries cannot be removed, but you can try to change it to “Closed” by talking to the bank, for which you may have to pay the remaining amount.
Que: Are the effects of Credit Card Loan Settlement and Loan Settlement different?
Ans: Yes, the effect of a Credit Card Loan Settlement can be worse, as credit card companies take it seriously and may refuse to issue new credit cards in the future.
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Founded in 2015, Ahk Tips is a New Delhi-based financial advisor specializing in debt relief and loan management solutions.
