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Vaishnavi kale
Vaishnavi is a Financial Content Writer at LoansJagat. She holds a B.Sc. and an M.Sc. She has experience in writing SEO-focused content across finance, digital marketing, education, and Ayurveda. Before joining LoansJagat, she worked with digital marketing agencies serving fintech clients and quick-commerce brands like Zepto and blinkit. At LoansJagat, Vaishnavi writes on banking, loans, personal finance, and insurance. Her work involves researching financial topics, understanding user search intent, and creating content that is clear and accurate. She has experience in SEO content writing, keyword research, content optimisation, and AEO. She enjoys simplifying complex topics into practical information that readers can easily understand and use. She believes that well-researched and reliable content plays an important role in helping people make informed financial decisions.
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If you are facing difficulties in repaying loans and you know that you are not able to pay this amount of EMI every month easily, you can go for loan restructuring. It helps you by making your repayment more manageable. You can simply reduce the EMI, change the interest rate, or offer temporary repayment relief. All these methods simplify your repayment journey. These methods are designed for both borrowers and lenders. So if you are also a borrower and need an easier way to repay your loan, you can go for loan restructuring.
Let's assume Sumeet took out a 30,00,000 housing loan, but after 1 year he lost his job. Now he didn't have money to pay the EMI. What will he do in this situation?. The most common and simple option is to go to the lender and tell them about his problem. He did that. His bank approved a moratorium period on his loan. Now Sumeet doesn't have to pay EMI for 6 months.
This is how Sumeet used loan restructuring in his difficult time.
Loan restructuring is a process in which lenders modify the terms and conditions of an active loan. The main reason for loan restructuring is to help borrowers who are facing financial difficulties. Most people take another loan to pay off the first one, but in loan restructuring, you don't need to do that because it makes your existing loan affordable for you.
Banks can make these changes in terms:
When Lenders change their terms according to borrowers' needs, the risk of default is reduced. It can provide temporary financial relief during situations like job loss and medical emergencies.
Have a look at the table below. It gives you a whole idea about loan restructuring.
These are the features of loan restructuring. You need to understand it carefully to decide whether loan restructuring suits you or not.
1. Note down the reason for real financial stress.
2. Then contact your bank and inform them about your condition.
3. Request loan restructuring now.
4. Submit all essential documents.
5. Now your bank will evaluate your documents, credit history, and financial condition.
6. If you are eligible, banks can approve loan restructuring.
7. Banks can go for:
8. They choose one of the above options and ask you to sign an agreement. This is the new agreement with new terms.
9. Then you pay a new EMI with new terms and conditions.
This is how loan restructuring works.
Lenders choose the option for the borrower according to the assessment. Revised terms can include:
Extension of Loan Tenure
Lenders increase the repayment period. So borrowers need to pay an EMI with a lower amount than before.
Reduction in EMI
If you don't want to extend the time period, you can ask for an EMI reduction. Lenders can approve it. But you need to pay a partial lump sum amount.
Revision of Interest Rate
In some cases, lenders may revise the applicable interest rate based on their policies.
Temporary Moratorium
In the moratorium period, you don't have to pay any EMI to the bank. It is like a holiday. But you need to pay interest even during this time.
One time settlement
There are many cases in which people can not pay their loan fully. In this case, lenders can agree to reduce the lump sum payment. This payment is accepted as a full and final settlement.
The above types are not fixed. The lender decides what to choose according to the borrower's financial condition.
Loan restructuring is really helpful for borrowers with bad financial conditions. It provides them with financial relief by modifying the terms of the agreement.
Loan Restructuring is a really good idea for people who are facing a financial crisis. But you need to understand that it affects your credit score. Not severely, but it affects it. But it's better than missing EMIs or defaulting on your loan. Here is how it affects your credit profile.
Actually, loan restructuring is generally a better option than missing EMIs or defaulting on your loan.
Loan restructuring is the best way to manage your existing loan. It is a process that modifies your agreement terms. Makes your loan repayment journey easy. If you are experiencing temporary repayment difficulties. Banks can modify loan tenure, EMI, or interest rate. By doing this, they literally reduce your financial pressure.
But before going for loan restructuring, you need to review the revised loan consolidation. Also, compare the total borrowing cost, and ensure the new repayment schedule aligns with your long-term financial goals.
Loan Restructuring makes repayment affordable and easy for you. It is a process of modifying the terms of an agreement.
There is no specific eligibility criteria for loan restructuring; it totally depends on the lender’s policy, your financial condition, and repayment history.
Yes, it can affect your credit profile. It depends on how the lenders report the restructured loan to the credit bureau.
