Before a loan settlement, ask the lender about a revised repayment plan, use savings to clear overdue equated monthly instalments (EMIs), or sell an asset. Each keeps your record cleaner than a settlement.
If settlement is the only way, get the agreed amount and the closure terms in writing before you pay.
Worked example: Ajay in Dhanbad
Ajay is 34 and works as a salaried mining equipment technician in Dhanbad. He earns Rs. 58,000 a month and has a CIBIL score of 752. He plans a Rs. 2 lakh loan for his sister's wedding, at an illustrative 16% per annum, and picks an EMI he can always pay, so he never needs a loan settlement.
EMI = P × R × (1 + R)^N ÷ [(1 + R)^N − 1]. P is the loan amount in rupees, R is the annual rate divided by 12 and by 100, and N is the tenure in months. The formula spreads the principal and interest into equal monthly payments, so early EMIs carry more interest and later ones more principal. All figures are rounded to the nearest rupee.
| Tenure | Monthly EMI (Rs.) | Total interest (Rs.) | EMI as share of salary (%) |
|---|
| 36 months (3 years) | 7,031 | 53,131 | 12.1 |
| 48 months (4 years) | 5,668 | 72,067 | 9.8 |
Last updated: 21st October, 2026
The 48-month option lowers the EMI by Rs. 1,363 but adds Rs. 18,936 in interest. The processing fee on Rs. 2 lakh is up to Rs. 8,260. Ajay picks 48 months (4 years), keeping the EMI under 10% of his salary as a buffer against a loan settlement.
What can delay approval: a CIBIL score below 650 or existing EMIs that take up a large share of your income. Names or addresses that do not match across documents, and more than one loan application in the same month, can also slow it down.
Planning a loan with an EMI you can always pay, so a loan settlement never arises? With a Bajaj Finance Personal Loan, you can borrow Rs. 40,000 to Rs. 75 lakh, subject to eligibility. Check your loan offer with your phone number and a one-time password (OTP) → apply online → receive funds within 24 hours* of approval.
