Personal loans can be a helpful financial tool for dealing with emergencies, consolidating debt, or financing significant purchases. RBL Bank offers personal loans with flexible repayment options and competitive interest rates. However, life can be unpredictable, and there may come a time when you are unable to make regular loan repayments due to financial hardship. If you are in such a situation, loan settlement might be an option to consider. Loan settlement allows you to close the loan with a reduced payment, relieving you from the burden of regular EMIs. In this blog, we will discuss the process of settle RBL Bank Personal loan from RBL Bank and how to approach it efficiently.
Personal loan settlement is a process where a borrower who is unable to repay their full loan agrees with the bank to pay a portion of the outstanding loan amount. The bank, in turn, forgives the remaining debt, marking the loan as “settled.” However, this option has a negative effect on the borrower’s credit score and should be seen as a last resort.
In the case of RBL Bank, the settlement process involves negotiation with the bank, where they assess your financial situation and determine if a settlement is feasible. The bank will typically only consider settlement if you have missed several payments and have demonstrated genuine financial difficulty.
Loan settlement is not always the best option and should be considered only under certain circumstances, such as:
Before opting for settlement, ensure that you have explored all other alternatives, like restructuring or refinancing the loan.
The first step in settling a personal loan with RBL Bank is to take stock of your financial situation. Consider the following:
Having a clear understanding of your financial health will help you negotiate more effectively with the bank and make a stronger case for settlement.
Once you have assessed your financial situation, the next step is to contact RBL Bank’s recovery or loan settlement department. You can do this by visiting your nearest branch or calling their customer service. Inform them that you are facing financial difficulties and would like to explore settlement options for your personal loan.
Be prepared to explain your situation and provide any details about missed payments or ongoing financial struggles.
RBL Bank will require documentation to verify your claim of financial hardship. This can include:
These documents help the bank assess whether you are eligible for loan settlement and what settlement terms they can offer.
After reviewing your financial situation, RBL Bank will propose a settlement amount. This amount is typically less than the total loan amount outstanding, and it might range between 50% and 80% of the original loan balance. During this phase, you can negotiate the settlement amount, especially if the bank’s proposal is beyond what you can afford.
Negotiation is critical in securing a settlement amount that is manageable for you. Make sure to clearly explain your financial limitations and provide realistic payment options that you can stick to.
Once both parties agree on the settlement amount, it’s important to formalize the agreement. Ensure that you receive a settlement letter from RBL Bank. This letter should clearly state:
Make sure to keep a copy of this document, as it serves as proof of settlement. Without a formal settlement letter, disputes could arise in the future regarding the status of the loan.
RBL Bank’s loan settlement policies are typically aimed at reducing their non-performing assets (NPA) and assisting borrowers in financial distress. However, these policies may vary based on the following factors:
The bank will generally offer settlement only when the borrower is unable to repay the full loan amount and when the loan has been in default for an extended period (typically 90 days or more).
While settling a loan may relieve you from further financial pressure, it significantly affects your credit score. When RBL Bank reports the loan as “settled” to credit bureaus like CIBIL or Equifax, it signals that you did not repay the loan in full, which leads to the following consequences:
A settled loan remains on your credit report for up to seven years, affecting your ability to obtain future credit.
Before deciding to settle your RBL Bank personal loan, consider these alternatives:
Loan restructuring involves working with RBL Bank to modify the terms of your loan, such as:
Restructuring the loan has a smaller impact on your credit score compared to settlement and may help you avoid the negative consequences of a “settled” status.
If you qualify, refinancing your loan with another bank or financial institution can provide relief. By refinancing at a lower interest rate or better terms, you can manage your repayments without having to resort to settlement.
If you have multiple loans or debts, consolidating them into one can help manage your finances better. A consolidation loan combines all your outstanding debts into a single loan, typically at a lower interest rate. This reduces the overall EMI burden and can help avoid settlement.
settle RBL Bank Personal loan can provide much-needed financial relief, but it should be approached cautiously due to its long-term impact on your credit score. Before opting for settlement, consider other alternatives, such as loan restructuring or refinancing. If you do decide to go ahead with settlement, ensure that you negotiate effectively and get the agreement in writing to avoid future complications.
Que: Can I settle my RBL Bank personal loan if I’ve only missed one EMI?
Ans: No, settlement is generally only offered when the loan is in default for an extended period, usually 90 days or more.
Que: How does settlement affect my ability to get loans in the future?
Ans: A settled loan negatively impacts your credit score, making it difficult to get loans in the future. Lenders may see you as a higher-risk borrower, and you may face higher interest rates.
Que: Can RBL Bank refuse to settle my loan?
Ans: Yes, the bank can reject your settlement request if they believe you can still repay the loan in full or if they feel you have not provided sufficient evidence of financial hardship.
Que: How long does the settlement process take?
Ans: The settlement process with RBL Bank can take anywhere from a few weeks to a couple of months, depending on how quickly you can negotiate and submit the necessary documents.
Que: Is loan settlement my only option if I can’t repay the loan?
Ans: No, before settling, you should explore other options like loan restructuring or refinancing, which have less severe impacts on your credit score.
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Founded in 2015, Ahk Tips is a New Delhi-based financial advisor specializing in debt relief and loan management solutions.
