Closure: the clean exit
Loan closure means the borrower has paid the full outstanding amount, including principal, interest, and any applicable charges, as per the original or revised schedule.
Settlement: a negotiated exit
Settlement means the lender has agreed to accept less than the full outstanding as a final payoff. This is reflected differently on the credit report and signals a different repayment history.
A note on outcomes
This article is general guidance, not legal advice. Outcomes in any specific matter depend on facts, documents, lender policy, and applicable law.