We all take loans from banks at some point in our lives. Whether it is taken from an individual or a loan is taken from a bank. Many times we come across such a situation that we have to do this. Be it a loan for children's education or for daughter's marriage and Home Loan. If you take a loan from a bank, the bank gives you loan at different interest rates.
If the borrower from the bank dies, how does the bank recover the loan? Whether the loan is waived off or who has to repay it is known here.
Bank gives us different types of loans
For example Personal Loan, Home Loan, Car Loan, Business Loan and Education Loan etc. After taking the loan we have to repay the loan till the end of the tenure. But it often happens that when the borrower dies due to some reason, have you ever wondered what happens to that loan? Does the bank waive the loan after the death of the person or what is the rule related to it. Let's try to figure it out.
Does the bank waive the loan?
Many people think that the bank waives off the loan in case of sudden death of the borrower. But is it possible? The answer is, absolutely not. Even if a person dies, will the bank recover the entire amount? If a person dies after taking the loan, his heirs will repay the loan. If they don't do so, the bank legally sells the property and gets their money back. If the assets exceed the loan, the bank returns the auction proceeds to the legal heirs in such case.
When insured, the insurance company pays the loan.
Let us tell you that when we take loan from the bank, the customers are told about Term Insurance. This term insurance is taken to secure the loan. If you also take insurance while taking a loan, then the insurance company returns the loan to the bank after the death of the borrower. Whereas if no insurance is taken then the bank gives two options to the legal heirs. If they want, they can do one time settlement or get the loan transferred in their name, which they can repay later.
What will happen if I take a car loan?
If you have taken a car loan from a bank, then the bank first takes possession of the vehicle and auctions it. There will be a penalty for collecting money from auction. However, if the money is not recovered, in such a case he can also distribute other assets of the deceased like house, land etc. to repay the loan.
What happens when you have taken a personal loan?
Also, 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 remaining amount has to be paid to the heirs. However, personal loans are mostly insured and the customer pays the premium along with EMIs. In such cases, after the death of the borrower, the balance amount of the loan is recovered from the insurance company.
What happens when you take a business loan?
Like personal loans, business loans are also secured by insurance, so that in case of loss of business or even death of the borrower, the balance amount of the loan can be recovered from the insurance company. Assuming you are uninsured and the bank has given you a business loan against your transaction, your property is already mortgaged by the bank to the extent of your loan amount. So that it can be sold later to recover the loan.
Note:
Before adopting any health tips, consult a doctor. Because no one knows better than your doctor what is appropriate or how appropriate for your body
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Note:
Before adopting any health tips, consult a doctor. Because no one knows better than your doctor what is appropriate or how appropriate for your body