Bank Loan Rules 2024: From whom will the bank recover its money after the death of the loan taker, know the rules..
People take many types of loans to fulfill their financial needs. Banks provide personal loans to people for buying or constructing a house, buying a car, etc. Banks also charge interest on these loans and the person taking the loan pays the loan in the form of EMIs. Do you know that if the loan taker dies before paying the dues, then who bears the liability of the loan? Who pays the outstanding loan amount?
We all know that if you are taking a loan, then you have to repay your entire loan within the loan tenure on behalf of the bank. If this is not done, the bank can take legal action against the loan taker with full authority. But do you know that if the loan taker dies before paying the dues, then…. From whom does the bank collect the money?
First of all, who will repay the loan is decided by what type of loan it was and what is the collateral on it. This is different in the case of personal loans, home loans, car loans, or credit cards.
If you have taken a home loan
If the person who has taken the home loan dies, then the remaining amount of the loan has to be paid to his heir. If he is unable to repay the loan amount, then the bank recovers its loan by auctioning the property. However, if the home loan is insured, then the loan amount will be recovered from the insurance company. If term insurance is taken, then the legal process is completed by depositing the claim amount in the nominee's account. The legal heir has the right to pay the dues from the claim amount itself. If the loan is taken jointly, then the responsibility of loan repayment falls on him.
In the case of a car loan, the bank contacts the family members. If the borrower has a legal heir, who wants to keep the car and is ready to pay the dues, then he can keep it and pay the dues and if not, then the bank seizes the car and sells it to recover the dues. Personal and credit card loans are such loans that do not have any collateral, due to which banks cannot recover the outstanding amount from legal heirs or family members, if there is a co-borrower then he can repay this loan. However, if this does not happen then the bank has to declare it as NPA i.e. non-performing asset.
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