Who will pay the loan if the borrower dies? It’s a question everyone asks. As in a common discussion with an ordinary man, we are all confused from the beginning and not yet clear. No rule applies to everyone. So different types of loans have different types of tracking. Let’s take a look at some of them and see how flexible and cooperative our banking system is.
A bank is a financial institution. Who could grant a loan to individuals if they have certain basic documents? These documents are easy to request and obtain. These are required for verification purposes.
Now the question is what are the terms and ultimately who would be liable to pay if the primary borrower leaves?
Before that, it should be noted that in general, if the borrower does not repay the loan, he could then take legal action. The bank has this right.
1) Personal loan
First, comes the personal loan. This type is an unsecured loan. Thus, if the subject dies before reimbursement, he cannot ask the legal heirs to reimburse him. As in this type, there is no warranty involved. Thus, they could not seize or confiscate any property or ask the family concerned to meet the amount due.
Instead, they transfer the remaining amount to NPA. But in the case of a co-applicant, they can ask person x to step back. What is a co-applicant?
The same is followed with credit cards.
If this type of loan fails, it looks for a co-applicant, if he is not found or not in service to repay the loan. Then he approaches the relatives of the deceased. If they repay the required loan on time, all the better. Otherwise, he seizes the property or sells it to recover the loan.
The relatives of the deceased could also request a restructuring of the loan.
During a car loan, the family or legal heirs are asked to pay the due, if they disagree or if they do not. Then they have the right to seize and sell the asset or collateral. See how digital lending must report with tough new rules by November 30?