Loan settlement is a powerful debt relief tool, but it is often misunderstood. Misinformation can cause borrowers to either fear the process unnecessarily or enter into settlements without fully understanding the consequences. In this blog, we’ll debunk seven common myths about loan settlement and reveal the truth behind them.
Myth 1: Loan Settlement Clears Your Credit Record Completely
Truth: Loan settlement helps close your account, but it is marked as “settled” in your credit report—not “closed.” This can negatively impact your credit score for several years. However, with guidance from a loan settlement expert, you can minimize the long-term effects.
Myth 2: It’s Only for People Who Don’t Want to Pay
Truth: Loan settlement is designed for people who can’t pay—not those who won’t pay. It’s a legitimate financial solution for those facing genuine hardship. At Guardian Financial Experts, we ensure that only the most appropriate candidates proceed through the loan settlement process.
Myth 3: Loan Settlement is Illegal or Shady
Truth: Completely false. Loan settlement is a legal and widely accepted practice among banks and NBFCs. The RBI has guidelines that govern settlements. Working with a reputable loan settlement expert helps ensure compliance with all regulations.
Myth 4: You Must Pay the Entire Outstanding Amount
Truth: The whole point of loan settlement is to reduce the repayment burden. Lenders agree to accept a reduced amount in a one-time payment. The exact amount is negotiable—especially with the help of experienced professionals like Guardian Financial Experts.
Myth 5: You Can Do It Alone Without Any Risk
Truth: While some people try to negotiate on their own, this often leads to poor outcomes. A qualified loan settlement expert understands lender behavior, negotiation tactics, and how to protect your rights throughout the loan settlement process.
Myth 6: Once You Settle, You Can Easily Get New Loans
Truth: After a loan settlement, lenders may view you as a higher-risk borrower. Rebuilding your credit takes time and consistent financial behavior. However, you can bounce back faster with proper guidance from Guardian Financial Experts.
Myth 7: Loan Settlement Solves All Debt Problems
Truth: Loan settlement addresses specific loans, but not your entire financial situation. It’s one tool among many, and should be part of a broader strategy for long-term financial health.
Final Thoughts
Don’t let myths misguide your decisions. If you’re facing unmanageable debt, a loan settlement expert can help you assess your options and start the loan settlement process in a transparent and strategic manner. Reach out to Guardian Financial Experts for expert advice and responsible solutions.