Personal loan is a loan that is easily available. It does not require much paperwork. In times of trouble, if you are unable to arrange money from anywhere, you can manage your work by taking a personal loan.
That is why it is called an emergency loan. Personal loan is a collateral free loan, but the bank charges you a lot of interest for it. Suppose if a person dies after taking a loan from the bank, then who will be responsible for paying the outstanding loan amount? Know here what is the bank’s rule regarding this.
These are the rules for personal loan
Personal loan is an unsecured loan. This loan is given to the person after looking at the parameters of his income etc. In such a situation, the responsibility of repaying the personal loan also lies only with the person who takes the loan. If the person taking the personal loan dies, then the bank cannot harass any other member of the family to recover the dues. Neither can the successor or legal heir be asked for this. In the case of personal loan, after the death of the borrower, this loan is written off, that is, with the death of the person, his loan also ends.
What are the rules regarding home loan
In case of personal loan, the loan of the borrower ends with death, but this is not the case with home loan. In lieu of home loan, you have to mortgage the papers of your house or the papers of any property equal to the value of that loan. In such a situation, when the loan taker dies, the co-applicant is asked to pay the outstanding loan amount, who is usually a family member or the heir of that person is responsible for repaying the loan.
If he expresses his inability to do so, he is given the option to sell his property and pay off the loan amount. If the family does not do so, the bank auctions the mortgaged property and recovers the outstanding amount. To deal with this situation, home loan insurance is offered these days. In such a situation, if the loan taker dies, the bank recovers the outstanding loan amount from the insurance company and the house remains safe with the family.
This is the rule in case of credit card
The credit limit is also determined on the basis of the applicant’s income, credit score, existing loan and repayment history etc. In such a situation, the credit card holder is also responsible for repaying the amount spent through the credit card. But if the credit card user dies before returning the amount, then the bank writes off the outstanding amount of the loan.
But this does not happen in the case of secured cards. To get a secured credit card, FD has to be deposited as collateral. The limit of the secured credit card is decided according to the amount of the FD. If the secured credit card user dies, the bank has the right to recover the loan by encashing the fixed deposit.