How Borrowers Can Calculate Fair Settlement Amount | Lawfully Finance
When you’re struggling with overdue EMIs or multiple loan accounts, loan settlement often feels like the best way to regain control. But many borrowers make one crucial mistake — they accept any offer the lender gives, without calculating what’s actually fair.
Understanding how to calculate a fair settlement amount can help you save money, protect your financial future, and negotiate more confidently.
Here’s how to do it the right way — with guidance inspired by Lawfully Finance, India’s No.1 trusted debt relief platform.
🔹 1. Know Your Total Outstanding Balance
Before anything else, find out your total dues from the lender. This includes:
Principal amount left
Accrued interest
Late payment charges
Penalties and legal fees (if any)
You can request a final loan statement from your bank or NBFC to get accurate numbers. This becomes your base amount for calculating settlement.
🔹 2. Understand How Settlement Discounts Work
Banks typically agree to a one-time settlement (OTS) when they realize the borrower genuinely can’t repay in full.
They often offer a discount of 30% to 70%, depending on:
Loan type (secured or unsecured)
Duration of default
Borrower’s financial condition
Recovery stage (pre-legal or post-legal)
💡 Example:
If your total outstanding is ₹5,00,000 and the bank offers a 60% waiver, your fair settlement amount would be around ₹2,00,000.
🔹 3. Evaluate Your Repayment Capacity
A fair settlement is one you can realistically afford to pay at once or in short installments.
Banks prefer lump-sum payments, so calculate what you can manage from savings, family support, or asset liquidation without creating new debt.
If you commit to an amount you can’t sustain, the negotiation could collapse — and you might face legal pressure again.
🔹 4. Factor in Legal and Recovery Costs
Sometimes, the recovery process adds legal fees or agency charges.
A smart settlement negotiation should exclude or minimize these additional costs. Professionals like Lawfully Finance help borrowers negotiate fair terms where only genuine dues are considered.
🔹 5. Use Professional Negotiators for Better Results
Most borrowers lack the legal knowledge and negotiation power that professionals bring.
Debt experts at Lawfully Finance analyze your entire loan profile, assess your repayment ability, and calculate the ideal settlement range.
They negotiate directly with banks and ensure your agreement is legally documented — protecting you from future disputes.
🔹 6. Always Get a Written Settlement Letter
After agreeing on a fair settlement, ensure the bank issues an official settlement letter mentioning:
The settled amount
Payment timeline
Confirmation that no further dues remain after payment
This document is crucial for CIBIL updates and legal proof of closure.
💡 Final Thought: Fair Settlement Is About Smart Negotiation, Not Luck
A well-calculated settlement ensures peace of mind, saves money, and prevents long-term financial damage.
You don’t have to face it alone — Lawfully Finance specializes in getting borrowers the fairest and most affordable settlement deals in India.
✅ Start your journey toward fair and stress-free debt relief today — Sign up with Lawfully Finance
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