How to Negotiate Personal Loan Settlement in India

Many individuals find themselves unable to continue their payments on an unsecured personal loan for many reasons, including loss of employment, a medical crisis, or multiple other obligations. Individuals who find themselves unable to repay an unsecured personal loan have several solutions available to them, and one of these solutions is negotiating a settlement agreement with their lender.

This process will allow you as a borrower to negotiate with your lender to agree to accept a lower amount than what you owe as payment. Once the required payment has been made, the loan will be closed out and included in your credit report as settled (in a manner of speaking) through CIBIL reporting.

The following situations are typically when a borrower will need to consider a loan settlement: (1) you cannot repay the loan in full, (2) you have defaulted in a payment(s) and are behind on your payments, or (3) you are experiencing severe financial distress.

A loan settlement may not be the best first choice for some borrowers. You will want to consider negotiating a loan settlement in any of the following situations: (1) your income has significantly decreased and/or cannot pay all of your obligations, (2) you cannot afford to pay for multiple loans at once, (3) you have no savings or have run out of savings, (4) your loan is past due or is close to default.

If you and your lender settle on an amount to pay towards the balance of your loan, the next step will be to agree on a payment schedule to settle your loan balance for the negotiated amount.

Step 1: Understand Your Financial Situation

Before contacting the lender, first take stock of:

• The total balance owed on the loan
• Your current monthly income
• Your ability to make regular monthly payments

Step 2: Alert The Lender Early

You shouldn't wait until the situation worsens to call your lender.

Contact the lender and do the following:

• Let them know you are experiencing financial hardship
• Be honest and state you would like to resolve the debt
• Request information on settlement options

Step 3: Create An Offer To Settle

Make an offer for the amount you can afford to pay them based on their rules.

Keep in mind the following:

• Lenders will assess your ability to repay
• Lenders may want an OTS (one time settlement) payment
• Your initial offer to settle does not have to be the highest amount you can afford

Step 4: Negotiate Carefully

While on the phone with your lender, be sure to:

• Ask for the complete and final total due,
• Confirm when the amount is due,
• Confirm all miscellaneous charges the lender may want you to pay as part of your agreement to settle.

Step 5: Obtain Written Confirmation

Before you send your lender money, make sure you request:

• A written agreement to settle your loan balance,
• That the written agreement clearly states the final amount due, when the amount is due, and what Service Fee(s) you will be responsible for along with the settlement agreement.

Step 6: Make Payment As Agreed

Once you have made your payment within the time frame stated in the written agreement:

• Collect a No Dues Certificate from the Lender
• Verify with the Lender that your loan has been closed

Step 7. Checking Your Credit Report

After you have negotiated your settlement with your lender, it is a good idea to check your credit report, where the account will show as has been updated to “settled.” You should also monitor your credit score on a regular basis.

Negotiating with lenders can be a frustrating and overwhelming experience.

FREED has the expertise and experience to assist you throughout this process, making it easier and more organized.

FREED can help you achieve the following:

• Determine whether settlement is a suitable choice for you
• Obtain professional assistance negotiating with lenders
• Follow the legal process to reach a settlement
• Devise a plan to settle debt and rebuild your financial situation

FREED can assist you to legally and safely settle your loans.

For further information about what FREED can do for you, please contact a FREED specialist today.

A personal loan settlement will not allow an individual to “get away” without paying back their debt but it can provide relief for individuals that cannot repay their debts in full and need a feasible way to resolve their account by utilizing a settlement.

If you approach the settlement process correctly, you may be able to:

• reduce your overall financial stress
• clear your debts
• obtain a “fresh start” with your credit

Understanding what is needed for a successful settlement along with being properly prepared and receiving the right advice is very important when attempting to negotiate a personal loan with a lender.