Loan ‘settlement’ is when you pay a lump sum amount, which is lower than the outstanding loan amount, to pay off the loan ultimately. This is allowed when you face an unavoidable financial crisis and cannot pay the loan on time. The lender might allow a repayment holiday and then ask you to pay a lump sum to write off the loan. This is called ‘settlement’. ‘Closed’ is when you pay the loan on time through regular personal loan EMI and the loan amount is completely paid off as stipulated. ‘Default’ is when you default on your personal loan EMI and don’t pay it on time.