How to settle RBL Bank Personal loan

Personal loans can be a helpful financial tool for dealing with emergencies, consolidating debt, or financing significant purchases. RBL Bank offers personal loans with flexible repayment options and competitive interest rates. However, life can be unpredictable, and there may come a time when you are unable to make regular loan repayments due to financial hardship. If you are in such a situation, loan settlement might be an option to consider. Loan settlement allows you to close the loan with a reduced payment, relieving you from the burden of regular EMIs. In this blog, we will discuss the process of settle RBL Bank Personal loan from RBL Bank and how to approach it efficiently.

What is a personal loan settlement?

Personal loan settlement is a process where a borrower who is unable to repay their full loan agrees with the bank to pay a portion of the outstanding loan amount. The bank, in turn, forgives the remaining debt, marking the loan as “settled.” However, this option has a negative effect on the borrower’s credit score and should be seen as a last resort.

In the case of RBL Bank, the settlement process involves negotiation with the bank, where they assess your financial situation and determine if a settlement is feasible. The bank will typically only consider settlement if you have missed several payments and have demonstrated genuine financial difficulty.

When Should You Opt for Loan Settlement?

Loan settlement is not always the best option and should be considered only under certain circumstances, such as:

• Job Loss: If you have lost your job or your income has significantly reduced, continuing with EMI payments might be impossible.
• Medical Emergencies: Large medical expenses or long-term illness may make it hard to prioritize loan repayments.
• Business Failure: Entrepreneurs or business owners who have faced losses or had to close their business may find it difficult to continue repaying personal loans.
• Debt Overload: When you have multiple loans or credit card debts, settling one or more loans may help reduce the overall debt burden.

Before opting for settlement, ensure that you have explored all other alternatives, like restructuring or refinancing the loan.

How to settle RBL Bank Personal loan?

A. Understand Your Financial Situation

The first step in settling a personal loan with RBL Bank is to take stock of your financial situation. Consider the following:

• How much can you afford to pay?
• Are you facing temporary financial hardship, or is it long-term?
• What other debts or financial obligations do you have?

Having a clear understanding of your financial health will help you negotiate more effectively with the bank and make a stronger case for settlement.

B. Contact RBL Bank for Loan Settlement

Once you have assessed your financial situation, the next step is to contact RBL Bank’s recovery or loan settlement department. You can do this by visiting your nearest branch or calling their customer service. Inform them that you are facing financial difficulties and would like to explore settlement options for your personal loan.

Be prepared to explain your situation and provide any details about missed payments or ongoing financial struggles.

C. Submit Proof of Financial Hardship

RBL Bank will require documentation to verify your claim of financial hardship. This can include:

• Proof of income reduction: recent bank statements, salary slips, or job termination letters.
• Medical bills: If your financial distress is due to medical reasons, submitting relevant documents is crucial.
• Financial statements: A complete breakdown of your liabilities, income, and assets.

These documents help the bank assess whether you are eligible for loan settlement and what settlement terms they can offer.

D. Negotiate a Settlement Amount

After reviewing your financial situation, RBL Bank will propose a settlement amount. This amount is typically less than the total loan amount outstanding, and it might range between 50% and 80% of the original loan balance. During this phase, you can negotiate the settlement amount, especially if the bank’s proposal is beyond what you can afford.

Negotiation is critical in securing a settlement amount that is manageable for you. Make sure to clearly explain your financial limitations and provide realistic payment options that you can stick to.

E. Get the Settlement Terms in Writing

Once both parties agree on the settlement amount, it’s important to formalize the agreement. Ensure that you receive a settlement letter from RBL Bank. This letter should clearly state:

• The settlement amount you need to pay.
• The due date for payment.
• A statement confirming that the loan will be considered fully settled once the amount is paid.

Make sure to keep a copy of this document, as it serves as proof of settlement. Without a formal settlement letter, disputes could arise in the future regarding the status of the loan.

RBL Bank’s Loan Settlement Policies

RBL Bank’s loan settlement policies are typically aimed at reducing their non-performing assets (NPA) and assisting borrowers in financial distress. However, these policies may vary based on the following factors:

• The amount outstanding on the loan.
• The number of missed payments.
• The borrower’s repayment history.
• The borrower’s current financial standing.

The bank will generally offer settlement only when the borrower is unable to repay the full loan amount and when the loan has been in default for an extended period (typically 90 days or more).

Impact of Loan Settlement on Your Credit Score

While settling a loan may relieve you from further financial pressure, it significantly affects your credit score. When RBL Bank reports the loan as “settled” to credit bureaus like CIBIL or Equifax, it signals that you did not repay the loan in full, which leads to the following consequences:

• Your credit score will drop, often by several points.
• Future lenders will view you as a higher risk, making it difficult to secure loans.
• You may face higher interest rates on future loans or credit cards.

A settled loan remains on your credit report for up to seven years, affecting your ability to obtain future credit.

What to Consider Before Settingtling Your Loan

Before deciding to settle your RBL Bank personal loan, consider these alternatives:

A. Loan restructuring

Loan restructuring involves working with RBL Bank to modify the terms of your loan, such as:

• Extending the loan tenure: This reduces the EMI burden.
• Lowering the interest rate: Reducing the rate may make repayment easier.
• Moratorium period: You can request a temporary pause on EMIs if your financial difficulty is temporary.

Restructuring the loan has a smaller impact on your credit score compared to settlement and may help you avoid the negative consequences of a “settled” status.

B. Refinancing the Loan

If you qualify, refinancing your loan with another bank or financial institution can provide relief. By refinancing at a lower interest rate or better terms, you can manage your repayments without having to resort to settlement.

C. Debt Consolidation

If you have multiple loans or debts, consolidating them into one can help manage your finances better. A consolidation loan combines all your outstanding debts into a single loan, typically at a lower interest rate. This reduces the overall EMI burden and can help avoid settlement.

Conclusion

settle RBL Bank Personal loan can provide much-needed financial relief, but it should be approached cautiously due to its long-term impact on your credit score. Before opting for settlement, consider other alternatives, such as loan restructuring or refinancing. If you do decide to go ahead with settlement, ensure that you negotiate effectively and get the agreement in writing to avoid future complications.

Frequently Asked Questions (FAQ’s)