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4 Mins read
•GeneralLoan Settlement vs Loan Closure: Key Differences Explained
Summary
In this blog, the differences between loan closure and loan settlement are clarified. Loan closure is achieved through regular repayments and enhances credit scores, while loan settlement, used in financial distress, settles for less than owed and negatively impacts credit for years. The post also highlights alternatives and best practices for maintaining financial health.
Key Takeaways
- Loan closure involves full, on-time repayment and improves credit history.
- Loan settlement reduces debt owed but lowers credit scores for up to seven years.
- Alternatives include restructuring payments, extending terms, and asset liquidation.
- Maintaining responsible borrowing and timely payments is essential for credit health.
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