In today's time, taking a loan to buy a house, or car or to fulfill your other needs has become quite common. Whenever the bank gives a loan to someone, it keeps in mind the credit history, income source, and repayment capacity. But have you ever wondered who will compensate the loan taker if he dies? Let us tell you about it in detail.

What is the rule?

If the person taking the loan dies, the bank first contacts the applicant. The name of the co-applicant is usually registered in the home loan, education loan, or joint loan. If the co-applicant is unable to repay the loan, the bank contacts the guarantor.

If in this case the guarantor also refuses to repay the loan or does not have enough money, then the bank also contacts the legal heir of the deceased. This may also include family members of the deceased, such as wives, children, or parents. The bank asks them to repay the loan.

When can the bank seize the property?

If any of the co-applicant, guarantor, and legal heir is unable to repay the loan, then the bank also has the right to seize the property of the deceased and sell it. In case of home loan, the bank can directly seize the house of the deceased and recover the loan by selling it through auction.

What if there is loan insurance?

If the deceased person has taken loan protection insurance, then after his death the entire loan is repaid by the insurance company and there is no burden on the family. If the legal heir has not accepted the property of the deceased in inheritance, then he is not obliged to repay the loan.

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