A person takes the help of a bank to meet his financial needs. He takes a loan and fulfills the requirement and returns it to the bank with interest. From applying for a loan to disbursing the loan, there are many processes involved. Almost everyone needs a loan either in times of trouble or to fulfill their needs.
There are different types of loans. Such as home loan, vehicle loan, personal loan and many more. While taking loan from the bank, it is necessary to pay attention to many things. Did you know that if the borrower dies halfway through the loan due to any reason, who will have to repay the loan? Who has to pay the balance of the loan? So know…
Loan Repayment Rules After Borrower’s Death
We all know that if you are taking a loan then you have to repay the entire loan from the bank within the loan period. In case of violation, the bank takes strict action against the concerned person and takes legal recourse. But what will the bank do if the borrower dies? Who will take action against?
There are many rules regarding the repayment of the balance in the event of the death of the borrower. First it has to be seen what kind of loan the deceased took. Rules are different in case of personal loan, home loan and car loan or credit card.
If the home loan borrower dies, the remaining loan amount has to be paid to his heirs. If the heir is unable to pay, his property will be auctioned. Similarly, if the home loan is insured, the insurance company will cover the loan amount.
Bank rules are different in the case of vehicle loans. If the vehicle loan holder dies, the concerned bank seizes the vehicle. But if one of the family members of the deceased wants to keep the vehicle, he can pay the remaining amount and keep it otherwise the bank will seize the vehicle and sell it and keep the loan amount.
But if the deceased has taken a personal loan or credit card loan, the bank will incur losses. Because the bank cannot recover the remaining money from the family in personal loan. In such a situation, the bank declares NPA or non-performing asset.
