A One Time Settlement (OTS) is a debt resolution strategy where you agree to pay your creditor a single, reduced lump-sum amount, which is less than the total outstanding debt. The core benefit of an OTS is immediate and complete closure of the loan account, often with significant savings. It’s ideal if you have access to funds to pay off the reduced amount quickly. In contrast, a Term Settlement involves negotiating a structured payment plan where you pay reduced, affordable installments over an agreed period to clear your debt. While it offers ongoing relief from high EMIs, the loan remains open until the last payment.

Key Difference:

• OTS: One lump-sum payment for instant closure and maximum debt reduction.
• Term Settlement: Multiple, smaller payments over time for ongoing affordability and gradual debt resolution.

Both aim to reduce your debt and provide relief, but OTS offers a swift exit, while term settlement provides a manageable payment structure for those who can’t make a lump-sum payment.

Loan foreclosure is the process of completely repaying your outstanding loan before the scheduled tenure ends. This includes paying the remaining principal along with any applicable interest and prepayment charges. Once foreclosure is completed, the loan account is officially closed, and you no longer owe anything to the lender.

The key differences between foreclosure and settlement are:

• Foreclosure: Involves paying the full remaining loan amount to close the loan early, usually done when you have sufficient funds. It generally does not impact your credit score.
• Settlement: Involves negotiating with the lender to pay a reduced amount, less than the total outstanding debt, typically due to financial hardship. Settlement may affect your credit score.

In short, foreclosure is early full repayment, while settlement is negotiated partial repayment to resolve debt.

Loan settlement is the process by which a borrower and lender agree on a final, reduced payment amount to close or resolve an outstanding loan. Typically, this happens when the borrower is in financial distress and unable to pay off the full loan balance. Loan settlement can be seen as a way to negotiate a “deal” where the borrower pays less than what they originally owed, and the lender agrees to forgive the remaining balance.

Here’s how it works:

1. 1. The borrower (or a representative like a debt settlement company) negotiates with the lender for a lower payoff amount (usually a percentage of the balance).
2. 2. The lender may accept this reduced amount to close the loan and forgive the rest of the debt.
3. 3. The borrower pays the agreed-upon settlement amount, often in one lump sum or in some cases through term settlement for 3 to 6 months.
4. 4. The remaining debt is forgiven, but this can negatively impact the borrower’s credit score.

It’s a way to resolve debt when full repayment isn’t possible but can have financial and credit consequences.