The death of a loved one is a very hard thing to deal with. There are a lot of legalities that the immediate family or nominee of the departed need to care of. Apart from the certificates and transfer of various deeds, family and friends of the departed will also need to take care of payments. For example, if the recently demised was an applicant of a loan, can the payments on the loan stop? The answer is no, but a common misconception is that if the applicant of a car loan passes away, then the relationship with the lender of the loan is terminated. The burden of repaying the loan falls on the immediate family, legal nominee, or co-applicant of the loan. So, what is the protocol is such a scenario. There are two ways of approaching the scenario, here they are:
Stop Repayments on the Car Loan
If you decide that the remaining amount on the loan should not be repaid, then you can decide to stop the loan payments. You may feel that the car loan interest rate is high or that you do not need a car. However, as soon as you stop the repayments, the lender can decide to confiscate the car. The reason that they are allowed to do so is because the entire payment of the car loan is not completed.
Continue Repayments on the Car Loan
If you decide that you are fine with the car loan interest rate or that you need a car, then you will need to keep on making payments. However, you will need to inform the lender that the repayments will be made by you, not the original applicant. Once, you inform the lender that the applicant has passed away; the ownership of the car will be transferred to your name along with the loan. So, if you do wish to continue repaying the loan, check the amount that you will owe each month by using the car loan EMI calculator.
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