Who will pay the loan if the borrower dies? This is a question that everyone wonders about. As in common discussion with a common man we all are bewildered from the beginning and not yet clear. No one rule applies to all. So different types of loans have different types of follow-up things. Let us discuss a few of them and see how flexible and cooperative our banking system is.
A bank is a financial institution. Who could give a loan to the individuals if they do have certain elementary documents? These docs are easy to apply for and procure. These are required for verification purposes.
Now the question is what are the conditions and in the end who would be liable to pay if the primary borrower departs?
Before this let us be clear that in general terms, if the borrower fails to pay back the loan, then it could go for legal proceedings. Bank does have this right.
Banks:
1)Personal Loan
First and foremost, comes the personal loan. This type is an unsecured loan. So, if the subject party dies before repayment, then they cannot ask the legal heirs to pay it back. As in this type, there is no collateral involved. So, they couldn’t seize or forfeit any property nor ask the concerned family to fill the due amount.
Rather they transfer the remaining amount to NPA. But in case of any co-applicant, they may ask the x person to back. What is a co-applicant?
The same is followed with credit cards.
Home Loan
At the failure of this type of loan, it seeks a co-applicant, if not found or not in service to pay the loan. Then it approaches the kin of the deceased. If they repay the required loan within the due time then well and good. Otherwise, It seizes off the property or sells it to recover the loan.
The kin of the deceased could also ask to restructure the loan.
Car Loan
At the time of a car loan, family or legal heirs are asked to pay the due, if they discord or fail to do so. Then they do have the right to seize and sell off the asset or collateral. See How Digital loans must yield with new strict rules by 30 Nov?
