Calculate Your Loan Settlement Payout & Savings
Estimate what you would pay under a hypothetical one-time settlement percentage and compare your net cashflow difference against your outstanding balance.
Awaiting Calculation
Enter your loan balance and settlement offer percentage on the left, then click “Calculate Settlement Scenario” to generate your verified scenario.
How Loan Settlement Calculations Work in India
When a borrower defaults on an unsecured personal loan or credit card in India due to genuine financial hardship (such as medical emergencies, business loss, or job termination), banking institutions recognize that pursuing extensive litigation or asset recovery may be commercially unviable.
Under the Reserve Bank of India (RBI) guidelines on Compromise Settlements and One-Time Settlements (OTS), regulated lenders are empowered to unbundle accrued penal interest, waive bounce fees, and agree on a negotiated lump-sum payout to close the loan account permanently.
Understanding Your Settlement Scenario Results
The Bank Haircut Concept
The difference between your outstanding balance and the agreed settlement payout is termed the lender haircut. In standard unsecured loan settlements across Indian commercial banks, haircuts commonly range between 40% and 70% of the ledger balance.
Impact on Credit Report Status
A settled loan will be flagged as 'Settled' rather than 'Closed' in your CIBIL score report. While this temporarily impacts your credit score, it provides immediate legal closure and shields you from ongoing recovery actions.
Key Factors That Influence Actual Settlement Offers
Delinquency Vintage
Accounts classified as Non-Performing Assets (NPAs) for over 180 to 360 days typically qualify for significantly higher discount percentages.
Unsecured vs Secured
Settlements are predominantly accepted on unsecured debts (personal loans, credit cards). Secured loans with physical collateral require different legal mechanisms.
Hardship Documentation
Lenders require verified evidence such as termination letters, hospital bills, or income tax returns to sanction deep haircut approvals.