Personal Loan Recovery: If someone dies after taking a loan, from whom will the recovery be made?
In today's time, taking a loan for anything has become a common thing. Whether it is to buy a house, a car, money for business, or any personal expense, people take a loan from the bank for such needs. The bank charges you interest on the loan according to what you have taken the loan for. To repay the loan, you have to pay an installment (EMI) every month. Before giving a loan to a person, the bank finds out about his financial history and only after being fully assured, the bank gives the loan to that person.
What will happen if the loan dies before repaying it?
We all know that if someone does not repay his entire loan on time, then the bank can take legal action against the loan taker with full authority. But do you know that if the person taking the loan dies before repaying it, then in such a situation, who is responsible for the loan? Today we will tell you how the bank recovers its money in case of the death of the person taking the loan.
The bank takes these steps to recover the loan.
According to Tata Capital, if a person taking a loan dies, then first of all the bank contacts the co-applicants of that loan to repay the loan. If the co-applicant is also not able to repay the loan, then the bank contacts the guarantor, family member of the deceased, or legal heir and asks them to repay the remaining amount. If any of these people is unable to pay the remaining loan, then in such a situation the bank can seize the property of the deceased and recover the outstanding loan amount by selling it.
How do banks recover home loans or car loans?
If a person taking a home loan or car loan dies, then the bank seizes their house and car. Then the seized house and car are auctioned. Banks recover their loans from the amount received from the auction. Similarly, in any other loan, banks can also seize the remaining property of the deceased and then sell it to recover the loan amount.
Term insurance can be helpful in such a situation.
It is very difficult for any family to see the house or any other thing being auctioned. Therefore, to avoid such a situation, experts advise that people should take a term insurance of at least Rs 1 crore. So that if any such unpleasant incident has to be faced in the future, the loan can be reimbursed from the insurance amount.
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