Loan restructuring

Simplifying Repayments: A Guide to Loan Restructuring

December 23, 2023 • 4920 views

As per a survey conducted by TransUnion CIBIL, the number of defaulters has risen from Rs. 304,063 Crore in March 2022 to Rs. 353,874 Crore, as of March 2023. This implies that numerous borrowers are facing a financial crisis and are struggling to repay their loans. But what solution can they take? 

To mitigate such situations, the RBI (Reserve Bank of India) has introduced loan restructuring. This method helps borrowers renegotiate terms like interest rates and loan tenure. So, make sure to take maximum advantage and avoid situations like bankruptcy. Read on to know how!

What Is Loan Restructuring? 

Loan restructuring is a process where borrowers request their lenders to make some minor changes in the terms of the loan. This helps them to repay their credit on time and avoid defaulting. The option to restructure their mortgage is available to those borrowers who run short of funds and are unable to pay off their dues on time.  

Lenders will evaluate the current financial standing of the borrower and accordingly make changes in the monthly instalments, interest rate or loan duration. This helps borrowers to pay off their loans on time as per the new terms and conditions. There are numerous benefits that loan restructuring offers to borrowers.  

Also Read: Creating a Roadmap for Achieving Your Long-Term Financial Goals

Understanding the Benefits of Loan Restructuring 

Debt restructuring offers relief to borrowers going through a financial crisis, and helps ease their loan repayment burden. Here are some of the benefits of loan restructuring:  

  • Lower Payments and Interest Rates: Restructuring of credit offers a reduction in the interest rates of your existing loan, leading to revised monthly instalments that are affordable for you.  
  • Flexible Repayment Plans for Your Needs: This financial technique helps you to get the loan with favourable terms so you can easily repay the amount. All you will need to do is reorganise your repayment schedules based on your current financial standing.  
  • Timely Repayment of Your Loan: Loan rescheduling and restructuring ensure that you have sufficient cash to pay the EMIs on time. It minimises the adverse effect of missed EMI payments on your CIBIL score.  

How to Get Started with Loan Restructuring? 

Follow the below-mentioned steps to start with the loan restructuring process: 

Step 1: Assess Your Financial Situation 

When planning for debt restructuring, carefully assess your current financial standing and determine what portion of the loan you can repay with ease. 

Step 2: Contact Your Lender Immediately 

Get in touch with your lender and discuss your present financial standing. Accordingly, your lender will offer you a feasible solution to manage debt repayment.  

Step 3: Compare the Options Carefully 

After you have received the restructuring options from your lender, you will have to analyse them carefully and select the most suitable one. 

Step 4: Negotiate with Your Lender 

After you have chosen the suitable option, negotiate the terms and conditions with the lender to get maximum advantage from this new arrangement.  

Step 5: Complete the Necessary Paperwork 

After the loan restructuring conditions have been finalised, you can proceed with the completion of the necessary paperwork and pay the remaining EMIs accordingly.  

Also Read: 24-Hour Loans: How to Get Funds Within a Day

Loan Restructuring Tips and Best Practices 

Following are some tips and best practices that ensure that you make the most out of debt restructuring: 

  • Weigh in the Pros and Cons Associated: Before making your final decision, do your research well about loan restructuring as well as compare the pros and cons associated. 
  • Check the Eligibility Criteria for Restructuring: Make sure that you check the eligibility criteria as per the RBI rules before proceeding. 
  • Arrange the Documents Needed: Keep the necessary KYC papers, income proof documents, etc., handy to avoid last-minute hassle.  
  • Understand the Different Options Available: Once your lender provides you with the best restructuring options, make sure to compare them and choose the best one. 
  • Seek Professional Guidance If Needed: If you find it challenging to navigate through the loan restructuring process, consult a domain expert who can guide you through the process.  
  • Adhere to the Terms and Conditions Associated: After finalising the restructuring terms, ensure that you strictly adhere to them. 

Loan restructuring can prove to be a beneficial decision for you to avoid defaulting. However, it is essential to weigh the pros and cons first and analyse your current financial health to make the best possible decision. So, apply for a loan restructuring and free yourself from the debt pool.  

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.
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poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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