Loan Guarantor Rules: Whenever you go to take a loan from a bank, the guarantor of the loan is called by the bank. In such a situation, after the death of the borrower, the entire responsibility of paying the loan lies with the co-applicant or the guarantor. However, some rules have been made for paying the loan (loan repayment rules). The loan has to be paid on this basis only. In such a situation, it is very important to know how much money the guarantor will have to pay in case of not being able to repay the loan.

Two problems have to be faced in case of loan default-

Usually, two types of problems can be faced in case of loan default (Loan default rules). First, the credit score becomes negative. At the same time, in the case of taking a loan and not being able to repay it, all the information related to your credit is sent to CIBIL. This information is also provided to other credit rating agencies. Due to this, you may face problems in taking a loan further. If you have mortgaged a property to take a loan, then the bank (bank rules update) can capture it. After this, that property can also be auctioned.

What is the time limit?

In case of not being able to repay the loan, the bank (latest bank update) does not start the action immediately. Some time limit is given by the bank. First of all, a notice is sent by the bank to the borrower, in which the loan and interest amount (loan interest rate) is mentioned. If the bank feels that the borrower is not repaying the loan intentionally, EMI is not paid on time despite having money, or repayment is not done, then the bank can start legal action.

Rules are fixed in the guarantor agreement-

Apart from this, if there is a guarantor (loan guarantor) with the person taking the loan, then the bank contacts him first. For this, a guarantor agreement is also prepared. In this, it is informed that if the person taking the loan defaults in repaying the loan (loan default rules), then the guarantor will have to pay the money.

Legal action is taken in this situation-

The bank does not start its action on paying the first repayment (loan repayment). However, how serious this action can be, depends on the dispute or relationship between the bank and the customer. When the initial attempts fail, then the bank starts legal action (legal action on loan default).

Repayment time is given by the bank-

If any person taking the loan dies or any accident happens, then the bank gives a grace period in repayment (Bank Repayment rules). This grace period is given to the person taking the loan (if an accident happens or serious illness occurs) and his family. Reserve Bank believes that the borrowers (loan borrower rules) should be given time and banks can never use muscle power.

In this situation, the person is declared bankrupt-

Sometimes such a situation arises that due to deteriorating financial condition, the borrower is not able to pay the interest on time. Due to this, the amount of interest becomes more than the principal. In this situation, the borrower becomes unable to repay the loan. In this, while giving time, the bank offers only a one-time settlement. In this condition, the bank puts this loan in a non-performing asset or NPA. In this, the person taking the loan is declared bankrupt.

The bank waives the interest-

To avoid this, the bank gives the person a chance to get out of the loan (loan rules) by paying a small amount at a time. In this, it is seen that the bank waives off most of the principal and interest amount. After this, a proposal is made to give a lump sum amount. One can take advantage of this. However, the credit score (credit update) will go into the bad account and it will be difficult to take any kind of loan in future.

Disclaimer: This content has been sourced and edited from Hr Breaking. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.