The lending sector of India follows specific rules and guidelines in terms of recovering loans. The family may be unaware of what happens to a personal loan after a borrower’s death before the complete repayment of the loan.
The Loan agreement usually contains a clause indicating about the liability of the successors/legal heir to discharge the loan liability.
To know more about them, check out the sections below!
How do lenders recover a personal loan after the death of a borrower?
Apart from the security created in favor of lenders, the legal heir(s) of the deceased borrower is/are liable to repay the loan taken by the deceased borrower to the extent of Estate of the deceased borrower received by them.
Procedure to repay personal loan outstanding after a borrower dies
Now that it is clear what a lender does to a personal loan after the borrower's death, the borrower's family should also know the procedure they need to follow. This includes:
- Informing the lender about the borrower’s demise
- Continue with the repayment of the loan amount
In certain cases where the insurance policy is assigned as security, the lender will check and consider the feasibility of adjusting the claim proceeds against the loan outstanding dues.
Bajaj Finance Ltd. offers a personal loan with 100% transparency. Read the terms and conditions carefully before applying.
We also advise you to use our personal loan EMI calculator to calculate your EMIs beforehand and plan your repayment journey wisely.