Don’t take a loan without knowing this Who will pay the loan if the borrower dies.
What happens next if a person dies while taking a loan, usually from a bank or financial institution? Have you ever wondered?
Banks also have the right to take legal action against the borrower if the loan is not repaid within the stipulated time. If the principal borrower dies before repayment, the bank can recover the amount from the guarantor or legal heir.
Can’t hear anyone?
However, it varies depending on the loan taken by the borrower. Especially in case of personal loan or personal loan, the legal heirs or the surviving members of the deceased borrower or the surviving members cannot be asked to repay the arrears.
Will be waived
Because no collateral is bought in personal loan. So the bank cannot seize and sell any property of the borrower. If the borrower dies this will be added to the loan and it will eventually be written off. This includes debt including credit cards.
Loan with insurance
However, if there is a co-signer or co-applicant, it can be changed. Currently such loans are provided with insurance. It is important to note that this insurance covers the period of full repayment of the loan. The borrower pays the insurance premium for this at the time of taking the loan.
Confiscation of property
In case of home loan, if the primary borrower dies, the co-applicant will have to pay. Failure to do so will result in the legal heirs having to pay. If it is not paid, the property is seized and sold to recover the debt, thereby collecting the debt.
Auto loan
During such periods the borrower’s successor can restructure the loan. Similarly, in case of car loan, there is a possibility of confiscation of the vehicle in case of non-payment.