Loan restructuring is a process in which a lender modifies the terms of an existing loan to help the borrower manage their repayments, especially if they face financial hardship.Remember, the specifics of loan restructuring will vary depending on the lender's policies, so borrowers should contact their lender to understand their options.
Types of Loan Restructuring: Loan restructuring can be done through:
Extending the repayment period
Adjusting the principal amount
Changing the amount of installments
Modifying the interest rate
A combination of the above methods
Impact on Credit Score: Loan restructuring typically impacts credit scores negatively. Even if only one loan is restructured, lenders may report all loans as restructured, which can be seen as a negative signal by future lenders. However, borrowers can work on improving their credit scores over time.
Assessment of Eligibility: The lender will assess the borrower’s financial situation and eligibility based on their policies.
Evaluation of Restructuring Options: The lender may offer several restructuring options, and the borrower can select what best suits their financial needs.
Formal Application: The borrower submits a formal application for restructuring, often with supporting financial documentation.
Credit Impact Consideration: The lender informs the borrower of the credit score implications of restructuring.
Approval and Agreement: If approved, the lender provides new terms, and the borrower agrees to the modified repayment structure.
Loan restructuring options and eligibility criteria vary by lender, so borrowers should reach out directly to their lender to understand the terms available to them. The decision to restructure a loan should be made based on a careful assessment of the borrower's financial needs and repayment capacity.
Loan Amount
Min ₹10
Max ₹10,000,000
Rate of Interest
Min 5%
Max 25%
Loan Tenure
Min 3 months
Max 72 months
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According to RBI guidelines, the following are eligible for loan restructuring:
At the bank's discretion, the loan's remaining term may be increased by a maximum of 24 months, including the moratorium period, to lessen the burden of your monthly EMI payments.
Loan restructuring will reduce your credit scores. However, once you pay your loan in full and in monthly installments, your credit score will improve.
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Disclaimer
The starting interest rate depends on factors such as credit history, financial obligations, specific lender's criteria and Terms and conditions. Moneyview is a digital lending platform; all loans are evaluated and disbursed by our lending partners, who are registered as Non-Banking Financial Companies or Banks with the Reserve Bank of India.
This article is for informational purposes only and does not constitute financial or legal advice. Always consult with your financial advisor for specific guidance.
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