Understanding Personal Loan Settlement: A Complete Guide
Personal loans offer quick financial relief for various needs, from medical emergencies to home renovations. However, financial challenges can sometimes make it difficult for borrowers to repay these loans on time. This is where personal loan settlement becomes a viable option for those struggling to manage their debt. What is Personal Loan Settlement? Personal loan settlement is a financial arrangement between a borrower and a lender where the lender agrees to accept a lump sum amount that is less than the total outstanding loan, in full settlement of the debt. This usually happens when the borrower is unable to repay the loan due to unavoidable financial difficulties such as job loss, health issues, or a sudden drop in income. It’s important to note that loan settlement is not the same as loan closure. In a settlement, the lender writes off a portion of the loan, while in closure, the full amount (principal and interest) is paid back. When Should You Consider Loan Settlemen...