Personal loan indebtedness can prove to be difficult to manage, particularly when one is financially distressed. Borrowers tend to turn to two options: loan restructuring and loan settlement. Both seek to bring an end to agony, but making decisions that are in your best interest regarding your financial well-being is based on being aware of these distinctions.
What is loan restructuring?
Restructuring of the loan entails a change in its current terms to help the borrower repay. The process may involve changing the repayment schedule, lowering the rate of interest, or lengthening the period of the loan. The key aim is to make the repayment easier without the borrower defaulting on the loan.
What is loan settlement?
If the lender and borrower decide to pay a lesser amount, less than what is to be paid in total, then effectively the loan has been closed down. When there is a moment when the borrower doesn’t have enough money to afford paying for the loan itself in total, such an option becomes taken into consideration frequently enough.
In conclusion, an individual’s personal financial state alongside their future goals will help them select between debt restructuring or loan settlement. Before deciding it is best to consult with financial consultants and be straightforward with lenders about all available options.
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