We all take a loan from the bank at some point in our life. Whether it is taken personally from any person or loan is taken from any bank. Sometimes we find ourselves in situations where we have to. Whether it is to take a loan for children’s education, for daughter’s marriage or for home loan. If you take a loan from a bank, then the bank gives you many loans at different interest rates.
Banks provide us with different types of loans?
For example personal loan, home loan, car loan, business loan, education loan etc. After taking the loan, we have to repay the loan by the end of the term. But there are times when the borrower dies due to some reason, have you ever thought what will happen to that loan? Does the bank waive the loan after the death of the person? Or what are the rules related to it. Let’s try to find out today.
Do banks waive loans?
Many people think that in case of untimely death of the borrower, banks waive their loan. But is it possible? The answer is absolutely no. No matter who dies, the bank will recover their money. If a person has died due to debt. Then the heir of his jagir would pay that debt. If they don’t, legally the bank sells the property and gets their money back. If the assets exceed the debt, the bank also returns the auction proceeds to the legal heirs in this situation.
Insurance company repays the loan when it is insured?
It is known that when we take loans from banks, customers are told about term insurance. This is done to secure the term insurance loan. If you also take out the insurance while taking the loan. So in this situation, after the death of the borrower, the insurer returns the loan to the bank. On the other hand, if there is no insurance, the bank gives two options to the legal heirs. If they want, they can do one time settlement or transfer the loan in their name, which they can repay later.
What if I take a car loan?
If you have taken a car loan from the bank, then the bank first takes possession of the vehicle. conducts auction. Penalty for recovery of money from auction. However, if the money is not recovered, in this case, he can also sell the other assets of the deceased like house, land etc. to settle the debt.
What happens when you take personal loans?
On the other hand, if you have taken a personal loan, then the bank asks you to decide the nominee. In such cases, after the death of the borrower, the heirs have to pay the dues. However, personal loans are often insured loans and the customer pays the insurance premium along with the EMI amount. In such cases, the loan balance is recovered from the insurer after the death of the borrower.
What Happens on Business Loan When you have?
Like personal loans, business loans are pre-insured so that the loan can be recovered from the insurer in the event of the collapse of the business or the death of the borrower. If it is assumed that you did not take insurance and the bank provided business loan on seeing your transaction. So in this case the property is already mortgaged equal to your loan amount. So that later it can be sold to recover the debt.