Running a business often comes with its own set of financial challenges, and sometimes, keeping up with business loan repayments becomes difficult due to unexpected circumstances. RBL Bank offers business loans to help businesses grow, but when financial difficulties arise, paying back the loan might feel overwhelming. If you’re struggling to meet your loan commitments, settling your RBL Bank business loan could be an option to consider.
Loan settlement involves negotiating with the bank to repay an amount that is less than the total outstanding balance. While this option may seem like a relief, it can have long-term effects on your credit score and financial standing. In this guide, we will take you through the steps to settle your RBL Bank business loan effectively, with tips on how to negotiate the best settlement possible.
Business loan settlement refers to the process of negotiating with the bank to repay a portion of the total outstanding loan amount. Instead of repaying the full balance, the bank agrees to accept a reduced lump sum to close the loan account. This option is typically pursued when a borrower is in severe financial distress and unable to meet the original loan terms.
While settlement may provide immediate relief from financial pressure, it comes with long-term consequences, particularly concerning your credit score. Therefore, it’s important to understand the settlement process and its impact before opting for this route.
Settling a business loan with RBL Bank might become a necessity under certain circumstances, such as:
In such cases, negotiating a settlement might be the best way to manage your financial situation.
Before you approach RBL Bank for a settlement, take a thorough look at your financial condition. This will help you determine how much you can realistically offer as a settlement amount. Factors to evaluate include:
Understanding your finances will help you come up with a realistic offer during settlement negotiations.
Once you have assessed your financial situation, it’s time to initiate communication with RBL Bank. Contact their loan recovery department or visit the nearest branch to explain your financial challenges and request a loan settlement.
RBL Bank will assess your request and review your financial situation to determine whether settlement is a viable option.
Once RBL Bank agrees to discuss a settlement, the negotiation process begins. Key factors to focus on during negotiations include:
Negotiating the best possible terms requires clear communication and a detailed explanation of your financial limitations.
Once both parties agree on the settlement terms, it’s crucial to get everything in writing. Ensure the settlement letter includes:
Having a written agreement protects you legally and ensures that the settlement terms are binding.
After you make the agreed settlement payment, request a Settlement Certificate or No Dues Certificate from RBL Bank. This document officially confirms that the loan has been closed and no further dues remain.
Additionally, ensure that RBL Bank updates your credit report to reflect that the loan has been settled. While the loan won’t be marked as “paid in full,” it will show as “settled,” which is crucial for future financial planning.
Although loan settlement might solve your immediate financial problem, it has a significant impact on your credit score. Some consequences include:
Before proceeding with loan settlement, consider these alternative solutions:
RBL Bank may allow you to restructure the loan by modifying its terms. Loan restructuring can include extending the repayment tenure, lowering the interest rate, or temporarily pausing payments to give you time to stabilise your finances.
You might also consider refinancing the loan by taking a new loan with better terms to pay off the existing one. This can reduce the EMI burden and provide a longer repayment period, making it easier to manage your finances.
Seek help from a debt counsellor to explore other strategies for debt management. They can guide you in finding the most suitable solution without damaging your credit score.
Settling an RBL Bank business loan may be a feasible solution if your business is struggling financially and you cannot continue making regular repayments. However, before you proceed, it’s crucial to understand the consequences, particularly the impact on your credit score. Additionally, explore alternatives like restructuring or refinancing to find the best solution for your financial situation.
Loan settlement should always be viewed as a last resort. When you decide to move forward, ensure that you negotiate the best possible settlement terms, and obtain a settlement certificate to officially close the loan.
Que: Can I settle my RBL Bank business loan if it’s in default?
Ans: Yes, you can settle your RBL Bank business loan even if it’s in default. However, the bank may only offer settlement after exhausting other recovery options.
Que: How long does the settlement process take?
Ans: The settlement process can take anywhere between 30 to 60 days, depending on how quickly negotiations proceed and the time required to make the payment.
Que: Will settlement affect my credit score?
Ans: Yes, settling a loan will negatively affect your credit score. The loan will be marked as “settled” rather than “paid in full” on your credit report.
Que: What if I can’t make the lump-sum settlement payment?
Ans: If you cannot make a lump-sum payment, consider asking the bank for a loan restructuring or explore other alternatives, such as refinancing.
Que: Can I negotiate the settlement amount?
Ans: Yes, you can negotiate the settlement amount with RBL Bank. Typically, banks are willing to accept between 50% to 75% of the outstanding balance as a settlement amount.
Previous Post
Next Post
Founded in 2015, Ahk Tips is a New Delhi-based financial advisor specializing in debt relief and loan management solutions.
