The system requires documentation for every event, including birth, death, school graduation, and even loan repayment in full. Even if you’ve paid all your outstanding debts, if you don’t have a No Objection Certificate (NOC), it’s not on record. This leaves you open to pursuit by recovery agents and even potential legal conflicts.
Thus, you need to ensure that all phases of the loan cycle are supported by relevant paperwork. If you've ever taken out a Personal Loan, you are aware that the process generally entails four steps: loan application, loan approval, receiving the instant Personal Loan, and timely loan repayment.
You may apply for a Personal Loan entirely online with some of the best online lenders in the country. You are almost done with the Personal Loan application process as you pay off all your EMIs. Keep in mind that there is just one action left for you to take at this time. The settlement of closing formalities is the final step in the repayment process. Collecting your loan NOC is one of the most important loan closure formalities. Learn everything you need to know about loan NOC or loan clearance certificates in this article.
NOC is an abbreviation for No Objection Certificate. In the case of a Personal Loan, it can also mean Loan Clearance Certificate. It is a legal document that the lender issues to confirm that all your unpaid debts have been cleared and that no more debts are due to be paid on a specific date. When your lender issues you a Personal Loan NOC, your cycle of loan repayment is officially over. As a result, it shields you from any potential legal ramifications related to your debt.
In the case of Personal Loans, it is a document that the lender issues certifying that the borrower has paid the full amount of interest due as well as all other obligations they were required to fulfil while repaying the loan. It is crucial to obtain the NOC from the lending institution that provided the loan once it has been repaid. Every NOC for a Personal Loan will often include a few important statements. A list of the same is provided below.
1. Your name
2. Details of the loan
3. Date of closure of the loan
4. A declaration explicitly stating that the full amount of the loan, including interest, has been paid.
It should be noted that, if the lender has received the relevant paperwork, a Personal Loan NOC letter waives all their claims to possession of the collateral. Typically, the Personal Loan NOC certificate is sent to the borrower's address by banks, NBFCs, and other regulated financial institutions. However, if the borrower changes their address at any point during the repayment period, the borrower must make sure that the lender is informed so that the change can be recorded.
Also Read: Different Types Of Personal Loans In India
A loan NOC is a legal document that attests to the full payment of all your dues. Failure to collect your loan NOC could result in problematic situations. For instance, your lender can inadvertently request that you repay the past dues. It can be challenging to prove that you have paid all your dues in the absence of any paperwork. Therefore, it is advised to obtain all necessary documents, such as the loan NOC, from your lender.
If the lending company fails to collect your loan NOC and inform CIBIL of it, it is your responsibility to alert CIBIL. It is not the responsibility of your lender to do so. If you don't tell the credit bureau, it can be assumed that you have not paid back the loan. This could hurt your credit score and prevent you from obtaining loans in the future at favorable interest rates.
The worst-case scenario is that your lender might file a lawsuit against you. It will also be difficult to prove your case in the absence of a loan NOC. You could also take your time and follow up with your lender on the NOC. You'll feel more at ease and be able to avoid future legal issues if you receive the loan NOC document.
You absolutely must obtain the NOC from your current lender if you wish to apply for a balance transfer. Your new lender won't be able to initiate the balance transfer process without a loan NOC.
Applying for and receiving a loan clearance certificate is simple. Keep in mind that you can only apply for a loan NOC once your loan has been fully repaid.
1. Firstly, you must first inform your lender that all your monthly instalments have been paid.
2. You will have to provide documentation that proves your identification, residence, and loan-related information as well as loan statements that include information on your EMIs.
3. You will need to submit a cheque and identity proof for the lender to verify information like your account number and identity.
4. Your loan account is closed once the necessary paperwork and formalities have been completed, and your lender issues you a loan NOC.
Also Read: 5 Easy Steps to Get a Personal Loan
You put a lot of work into making on-time loan repayments. To obtain a loan NOC from your lender that will keep you protected in the future, you must follow a few easy steps. Having a good CIBIL score is facilitated by the fulfilment of loan-related formalities. You can obtain instant Personal Loans from the top lending companies in the future at competitive rates thanks to your strong credit score.
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