How the bank collects the loan money in case of sudden death of the loan holder | What if someone dies after taking a loan from a bank? | Loan

How the bank collects the loan money in case of sudden death of the loan holder

How the bank collects the loan money in case of sudden death of the loan holder

Most people have this misconception that if the borrower dies suddenly, the loan is forgiven. This idea is completely wrong, the bank collects their money. So let's find out how banks do this.

In our present times we depend on loans for everything. Whether it is home loan or business loan, personal loan, auto loan, education loan etc. any loan. And no matter what, the income of the common man is not so much that this big work can save money, so they have to depend on loans.

But here comes the big question that what happens if the borrower dies suddenly for some reason? Does the bank forgive their loan?

Most people have this misconception that if the borrower dies suddenly, the loan is forgiven. But this idea is completely wrong. Banks never allow them to be at a loss, they just recover their money. So from whom does the bank collect money? Everything about this is given below.

If there is a home loan left: Home Loan

If the home loan of the loan holder is outstanding, then the owner of the property after the death of the deceased has to repay the remaining loan. You cannot own the property until the loan is repaid. If for some reason the property owner is unable to repay the loan, the bank forfeits the person's property. The bank recovered his money by auctioning the property.

Most banks offer term insurance to the loan holder at the time of giving home loan so that the home loan is secured. In this case, in case of death of the loan holder, the loan money is recovered by the bank from the insurance company. If a loan holder dies, it is first checked whether the person has term insurance or not, if any, then the bank will recover the money by claiming the loan amount directly from the insurance company.

If there is no term insurance, the loan will be recovered from the property owner. Even if the person has no heirs, the banker has the full right to confiscate the person's entire property and auction off the money.

If there is an auto loan left: Auto Loan

The same rules are applied for auto loans as for home loans. In this case the borrower is asked to repay the loan from the heir. If for some reason the person is unable to repay the loan, the bank seizes the vehicle of the bank holder and auctioned off the loan money from his money.

If there is a business loan left: Business Loan

The business loan is then used to confirm who will repay the loan if the borrower dies. The bank takes out insurance cover before giving a business loan, the premium of which is first taken from the loan holder.

And if the loan holder dies, the bank collects the remaining loan money from the insurance company. In the case of business loans, banks have already secured their money. Where at the time of loan the bank mortgages gold, land, house, fixed deposit etc. from the loan holder equal to the loan value. After the death of the loan holder, the bank sells the property and collects their money.

If there is a personal loan left: Personal Loan

In fact, a personal loan is an unsecured loan. The rest of the loan amount is called bank for the heir of the loan holder. Personal loans are always insured loans, the premium of which the borrower has to pay with EMI. For this reason, the bank collects the rest of the personal loan directly from the insurance company.

If there is a credit card left: Credit Card Loan

If the credit card holder dies, the balance is taken from the card holder's property owner. The owner of the deceased's property has to pay the remaining amount from his property.

Then you know who is responsible for repaying the rest of the loan if a loan holder dies suddenly and how the bank collects their loan. Hope the bank forgives the loan after death, understand this misconception.

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