Managing personal loan repayments can sometimes become challenging, especially during financial hardships. If you’re currently struggling to repay a LiquiLoans personal loan, opting for a loan settlement might be a viable solution. However, it’s essential to understand the process, implications, and potential impacts on your credit profile before making this decision. This guide walks you through everything you need to know about settling a LiquiLoans personal loan, covering what settlement means, how it affects your financial future, and step-by-step actions to make the process as smooth as possible.
Loan settlement is an arrangement between a borrower and a lender where the borrower agrees to pay a reduced amount, typically a one-time lump sum, to close the loan account. This option is considered when the borrower faces significant financial difficulty and cannot meet the original loan terms. The settlement amount is often less than the total outstanding balance, but it allows the borrower to clear the loan in exchange for a reduced payment.
Once a loan is settled, the status on your credit report is marked as “settled” instead of “closed” or “paid in full,” which may have a lasting impact on your credit score and future borrowing potential.
Loan settlement is often regarded as a last resort due to its negative effect on credit scores. It’s important to weigh all options before choosing this route. Consider settling a personal loan if:
Evaluate Your Current Financial Condition
Before approaching LiquiLoans, it’s essential to understand your financial position fully. Calculate your monthly expenses, income, and outstanding debts to determine a lump-sum amount you can realistically offer for settlement. The amount should be feasible for you to pay in one go and should be substantial enough to be considered by LiquiLoans.
Reach Out to Initiate the Settlement Process
Call LiquiLoans’ customer service or visit their office to explain your financial difficulties. Being transparent about your circumstances and presenting yourself as willing to settle in good faith is key. Most financial institutions, including LiquiLoans, are willing to negotiate if they see a genuine inability to pay and a willingness to resolve the debt amicably.
Back Your Settlement Request with Evidence
Prepare documents that substantiate your financial hardship. Documentation may include:
These documents serve as proof of your inability to meet the original repayment schedule and may strengthen your case for a favorable settlement.
Discuss and Finalize a Reasonable Settlement Figure
Engage in negotiations with LiquiLoans’ representatives to determine an agreeable settlement amount. Generally, lenders may be open to accepting 50-80% of the outstanding balance, depending on the financial circumstances. Aim for an amount that aligns with what you’ve assessed in Step 1, but also be prepared for potential counteroffers.
Key Points to Cover During Negotiation:
Secure a Formal Agreement Outlining Settlement Terms
Once both parties reach an agreement, it’s crucial to get the terms in writing. Request a document from LiquiLoans that clearly states:
This written agreement safeguards you in case of any disputes later and provides a clear record of the settlement.
Pay Using a Trackable Payment Method
Complete the settlement payment by the agreed-upon date using a trackable payment method, such as a bank transfer or demand draft. Keeping proof of this transaction is important for any potential future disputes or verification purposes.
Confirm That All Liabilities Are Cleared
Once the settlement payment is processed, request a No-Dues Certificate from LiquiLoans. This document confirms that there are no outstanding liabilities on your part, which serves as a crucial record for your financial history.
When you settle a loan, your credit report reflects the loan as “settled” rather than “closed” or “paid in full.” This status indicates that you did not meet the original terms, which can impact your credit score in several ways:
Before committing to settlement, explore these alternatives:
Choosing to settle a LiquiLoans personal loan is a significant decision that can impact your financial future. While it provides short-term relief by reducing immediate debt, the long-term effects on your credit score and future loan eligibility must be weighed carefully. Before proceeding, make sure you’ve exhausted all other options, from restructuring and refinancing to seeking professional financial advice.
By understanding the process, negotiating thoughtfully, and planning for the impact, you can make the best choice for your financial situation.
Que: Is it guaranteed that LiquiLoans will accept my settlement offer?
Ans: No, LiquiLoans is under no obligation to accept a settlement offer. Acceptance depends on their assessment of your financial situation and the likelihood of recovering the debt.
Que: How long does the settlement process usually take?
Ans: The duration varies. Simple cases might take a few weeks, while complex ones could extend over several months, depending on the documentation, communication, and negotiations.
Que: Can I negotiate a settlement amount lower than the outstanding loan balance?
Ans: Yes, but the success of this negotiation depends on LiquiLoans’ policies and their perception of your ability to repay. It’s common for lenders to agree to a 50-80% settlement in cases of genuine hardship.
Que: What is the difference between “settled” and “closed” in terms of loan status?
Ans: “Settled” indicates that the lender accepted a lesser amount to close the loan, while “closed” or “paid in full” means the borrower repaid according to the original terms. A “settled” status negatively impacts your credit score more than a “closed” status.
Que: Will settling my loan affect future borrowing opportunities?
Ans: Yes, since lenders may see the “settled” status as a sign of financial instability, which could lead to either rejection of future applications or offers with higher interest rates.
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Founded in 2015, Ahk Tips is a New Delhi-based financial advisor specializing in debt relief and loan management solutions.
