SBI Personal Loan Settlement is a process in which the bank or the lending institution settles your outstanding loan for a certain amount by giving a discount. This can prove useful for those who are unable to repay the full amount of the loan due to a financial crisis. But some important documents are required to complete this process.
To settle, you will have to provide documents like identity proof (Aadhaar card, PAN card), address proof (electricity bill, bank statement), income proof (salary slip, bank statement, ITR), and CIBIL report. Apart from this, if you are in a financial crisis, you may also have to submit proof of job loss, medical reports, or documents related to other financial difficulties.
When the bank accepts your settlement request, they give you a settlement offer letter, which contains the amount and terms of the settlement. After agreeing to this letter and making the payment, you need to get the final payment receipt and No Dues Certificate (NOC).
If you have taken a personal loan from a bank or financial institution and, for some reason, are facing difficulty in repaying it, then a loan settlement can prove to be a good option for you. SBI Personal Loan Settlement means that the bank or lender settles for a fixed amount by giving some discount on your outstanding loan so that the loan can be closed. But for this, some important documents are required, without which the settlement process cannot be completed.
When you demand loan settlement from the bank, first of all, you have to give proof of your financial situation so that the bank can understand that you are unable to repay the entire loan. For this, income proof, bank statements, salary slips, a nd other documents are necessary. Also, if you want to settle the loan due to any financial crisis, illness, or any other compulsion, then it is also necessary to give proof of that.
Apart from this, the bank usually also checks your CIBIL score and the old repayment history of the loan. Hence, it is important to understand your credit score and bank statements thoroughly before applying for a loan settlement. Another important document is the loan agreement, which states your loan terms and the outstanding amount.
Personal Loan Settlement is a solution, but it should be seen as a last resort. If you decide to settle, it is important to have the necessary documents ready beforehand so that the process can be completed quickly and without any hassle.
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 paying the entire outstanding loan amount. This facility is for those who are unable to repay their loan on time due to some reason 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, which may make it difficult for you to get a loan in the future. Therefore, it should be adopted only as a last option.
SBI Personal Loan Settlement companies negotiate with creditors to reduce the outstanding amount on unsecured loans such as credit cards, medical bills, or personal loans for you. SBI Personal Loan Settlement is not just an option for secured loans, such as mortgages or auto loans.
These offers only tempt banks if they think you won’t pay back the loan at all, so an SBI Personal Loan Settlement company will advise you to stop making payments on your loan immediately and instead open an escrow account and put your monthly payments into it. Once you have enough money saved up for a lump sum payment for an SBI Personal Loan Settlement, the SBI Personal Loan Settlement company facilitates the transaction.
If, for some reason, you are unable to pay your loan in full, then a loan settlement can be an option. In this, the bank or loan-giving institution (NBFC) settles your outstanding loan for a certain amount by giving some discount. But to complete this process, you have to submit some important documents.
1. Identity Proof
2. Address Proof
3. Income Proof
4. Loan Agreement
This is the document issued by the bank or NBFC at the time of giving the loan. It contains the details of the loan terms and your outstanding amount.
5. CIBIL Report (Credit Score Report)
During the loan settlement, the bank checks your CIBIL score, which gives them information about your credit history. This report shows your credit behavior and current loan status.
6. Settlement Request Letter
If you want to get the loan settled, then you have to give a written request letter to the bank, in which you will tell about your current financial situation and the need for settlement.
Let us understand both of these in detail:
In this, the borrower negotiates with his bank so that some part of the total loan amount can be waived off. This means that the borrower has to pay less than his original borrowing. This process is adopted when the borrower is unable to repay the entire loan amount and tries to settle with the bank.
Credit Card Loan Settlement is a process through which you can reduce your credit card dues by negotiating with the bank or credit card provider. When you are unable to pay the entire outstanding amount of your credit card and your financial situation becomes critical, the bank or credit card company agrees with you. In this, you are given a chance to end your liability by paying a certain percentage of the principal amount.
If you do not like the option of SBI Personal Loan Settlement, then you can also consider some other options, such as:
The impact can be seen in the following ways:
It has the following advantages and disadvantages:
If you want to apply it online, then follow the easy steps given below:
SBI Personal Loan Settlement is a process in which the bank or loan-giving institution (NBFC) settles your outstanding loan at a certain loan amount by giving a discount. This can prove to be helpful for those who are unable to repay the full loan amount due to some reason. However, some important documents are required to complete this process, which include identity proof, address proof, income proof, bank statement, CIBIL report, loan agreement, and documents related to financial crisis.
When you apply to the bank for loan settlement, they should have correct information about your current financial situation. Therefore, you have to submit your income proof, job loss letter, medical report (if applicable), and other documents related to the financial crisis. Apart from this, the bank also checks your credit score and loan repayment history. If the bank accepts your settlement request, you are given a settlement offer letter, which contains the settlement amount and terms.
After settling the loan, you must obtain the final payment receipt and a No Dues Certificate (NOC). This can prevent any kind of financial trouble in the future. However, you should also keep in mind that settling the loan can lower your CIBIL score, which may cause you trouble in getting a new loan or credit card in the future.
Que: How long does the process of SBI Personal Loan Settlement take?
Ans: The process of SBI Personal Loan Settlement can usually be completed in 6 to 8 months, but it depends on the amount of your outstanding loan and your financial situation. In some cases, this process can also take 1 to 2 years.
Que: Will my entire loan be waived by doing an SBI Personal Loan Settlement?
Ans: No, your entire loan is not waived through an SBI Personal Loan Settlement. Under this, the bank can waive some amount of your loan, but you have to pay the remaining amount of the loan. This agreement depends on what is agreed between the bank and the borrower.
Que: How will an SBI Personal Loan Settlement affect my credit score?
Ans: SBI Personal Loan Settlements can hurt your credit score. This can lower your credit score, and this information can remain on your credit report for up to 7 years, which may make it difficult to get a loan in the future.
Que: Can I opt for a settlement for secured loans as well?
Ans: No SBI Personal Loan Settlement is usually available for unsecured loans such as credit cards, medical bills, or personal loans. SBI Personal Loan Settlement is usually not an option for secured loans such as home loans or auto loans.
Que: Can I stop paying my loan during the SBI Personal Loan Settlement process?
Ans: Personal Loan Settlement companies often recommend that you temporarily stop paying your loan and instead deposit money in an escrow account. This deposit is later used as a lump sum payment for the SBI Personal Loan Settlement. However, this decision can hurt your credit score, so it should be adopted wisely.
Founded in 2015, Ahk Tips is a New Delhi-based financial advisor specializing in debt relief and loan management solutions.
