Financial wellness is about making smart choices with your money. An excellent choice if you urgently need access to money is a medical emergency loan (personal loan).

A personal loan is a financial solution that allows you to borrow a sum of money at an agreed interest rate over a specified period with a minimal processing fee for a personal loan. 

This arrangement is a great way to get a much-needed cash injection without putting yourself under undue pressure.

However, most lenders charge high personal loan interest rates in India, high fees, and sometimes conditions obscured in fine print that could negatively impact your finances. Are you familiar with a borrower’s rights while taking out a personal loan?

What are your rights as a personal loan borrower?  

As a personal loan borrower, a person has the right to ask any questions to the lender about the loan. They have the right to enquire about the interest cost, processing fee for a personal loan, and other fees, choose the repayment scheme according to their requirements, modify the repayment terms, prepay the loan, obtain proof detailing your loan’s obligations, rights, and responsibilities, and information about when it will be repaid, etc. 

What are the rights of a personal loan defaulter? 

The regulations do not offer lenders a free pass if you have defaulted on a loan. Below are some considerations you can make if you find yourself in a similar circumstance.

1. Right to adequate notice

Defaulters who owe money must be given sufficient time to repay their dues before possessing their assets. 

Lending institutions must provide borrowers with a 60-day notice to pay their debts if a loan is classified as a non-performing asset (NPA) and the repayment is 90 days past due.

The lender may then sell their possessions if they do not make payments within the required time. The lending institution shall give a further 30-day public notice of the proposed sale before selling the assets.

2. Right to be heard 

During the notice period, borrowers may object to the lender’s notice of impending repossession. The authorized officer must respond within seven days, advising them of the acceptance or denial of their concerns and providing good justification.

3. Right to fair valuation of assets 

The lender must give a notice stating the asset’s fair market value, auction date, reserve price, and time before selling the assets. 

If the borrower believes the lender is selling the asset at a low price, they can seek out a new buyer and introduce them to the lender.

4. Right to balance amount 

Remember that even if your item is seized, you still need to keep an eye on the auction process if you are a borrower who cannot make your loan payments. 

Lenders must repay the borrower any remaining funds if they receive surplus funds after collecting their debts. Get this money as soon as you can because it is rightfully yours.

5. Right to be treated politely 

Bankruptcy proceedings are serious, and defaulters need to be treated gently and respectfully at all times.

The lender shall treat the creditor with respect and courtesy. Individuals shall not harass, abuse, threaten, stalk, or follow the creditor.

6. Right to privacy 

Lenders occasionally use recovery agents to pressure borrowers into repaying their debts. It is crucial to keep the borrower’s privacy in mind.

These agents may get in touch with borrowers at a location they designate. 

What are the necessary steps one can take to prevent loan defaults? 

When borrowers take a loan, their main goal is repayment as per schedule. However, they might sometimes be unable to repay their loan amount. 

Once they realize that it is becoming challenging for them to repay the loan, they can consider the following options:

  • Ask the lender to reorganize their loan, give it a new structure, and change a few terms and conditions.
  • To make the EMIs affordable, ask to extend the length of their loan.
  • Consider interim aid if they are currently dealing with a short-term financial problem. However, in this circumstance, they might face a penalty.
  • They can also ask their lender to convert their loan from unsecured to secured to lower the interest rates. 


Defaulting on debts can severely damage your credit score and even cause problems securing loans down the line. You may use a bad credit loan to pay off other debts and start again, but these deals come with a hefty interest.

Moreover, the lender can seize your property or even sell it off to recoup the loan amount. 

Thus, it is essential to consider the cost associated with defaulting on a loan because it could affect your credit score. In addition, it is also crucial to opt for a loan from a reliable lender. With Fullerton India, a trustworthy lender, availing of a personal loan is straightforward, with a seamless process, competitive personal loan interest rates in India, and a 100% digital process.

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