Personal Loan NOC Certificate

All You Need To Know About Personal Loan NOC Certificate

August 23, 2022 • 25578 views

Collecting a loan clearance certificate or NOC after completing the credit repayment is mandatory. It serves as proof of loan settlement. Your credit score can improve after submitting it to the credit bureau. This blog provides information on what is an NOC and how you should collect it. Read on to know more!
An NOC, often referred to as a 'No Objection Certificate’ is a clearance document issued to a borrower who has successfully paid off their loan amount. The lender marks that they do not owe anything from the person, and it is a formal closure of one’s repayment cycle. You should safely maintain the NOC to avoid any legal ramifications that can arise from your debt in the future. 

Why Should You Collect Personal Loan NOC From Your Lender?

Now that you have understood the NOC meaning, consider going through the upcoming sections to realise the importance of a Personal Loan NOC:

  • Helps With Paperwork

A loan NOC is a legal document that attests to the full payment of all your dues. Failure to collect your loan NOC can result in problematic situations. For instance, your lender can inadvertently request to repay any 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.

  • Helps With Future Loans if Notified to CIBIL

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 favourable interest rates.

  • Keeps You Away From Legal Issues

The worst-case scenario is that your lender may file a lawsuit against you. During such a situation if you haven’t downloaded the loan NOC before, you will need to face unnecessary hassle. Thus, you must 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.

  • Helps with the Balance Transfer

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.

What Does The Personal Loan NOC State?

The NOC for loan closure certifies that your lender cannot obligate you for further instalment payments for that particular loan deal. It is crucial to obtain this document from the lending institution once all the instalments have been repaid. Every NOC for a Personal Loan will often include a few important statements. A list of the same is provided below.

  • Your name
  • Details of the loan
  • Date of closure of the loan
  • 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 ensure that the lender is informed so that the change can be recorded.

ALSO READ :- What is Underwriting in the Personal Loan Process and its Rules?

Advantages of a Personal Loan NOC Letter

These are some outright benefits of gathering a loan clearance certificate: 

  • Official Loan Closure

The primary benefit of a NOC Letter is it signifies the closure of the Personal Loan. It proves that you have successfully paid the loan amount.

  • Reflects Your Creditworthiness

It reflects your creditworthiness, that you have settled all your financial obligations.

  • Improves Chances of Approval for Future Loans

It also helps in increasing the chances of you getting any future loans easily.

  • Positively Impacts Credit Score

It improves and enhances your CIBIL score as it signifies that you pay your debts on time.

What are the Consequences of Not Having a NOC?

Without an NOC you cannot substantiate your future lender that you’ve repaid your past debt. Also, there remains a risk that the concerned lender can sue you for not furnishing the instalments on time. Therefore, it is your responsibility to coordinate with the loan provider and procure this document to avoid any sort of legal trouble. 

Documents Required to Avail a Personal Loan NOC

To download an NOC, you must produce these documents:

  • ID and address proof (Aadhaar card/ PAN card/ passport/ bank statement/ voter’s ID card)
  • Proof that all the instalments have been paid (basically the statement of your loan account)

Additional documents may be needed depending on your chosen lender. 
After the review stage is cleared, you will receive the NOC via courier to your registered address. 

How To Apply for A Personal 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.
Below are the steps that you will have to follow to acquire a loan NOC:

  1. Firstly, you must 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 to 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.

To Conclude

As the loan clearance certificate legally establishes your responsible behaviour as a borrower, you should be proactive in collecting this document. However, before applying for the same be sure to double-check whether you have any pending EMIs. Top-rated lenders like Poonawalla Fincorp provide you with the Personal Loan NOC without multiple reminders. So, instead of waiting, consider exploring the affordable Personal Loan plans available. 

Frequently Asked Questions About NOC For Personal Loan

1.    Can I get an NOC online?
These days, many lenders allow their customers to download the NOC online. However, some lenders send it via courier and for that, you need to apply by visiting their branch. 
2.    How do I write a NOC letter for a loan?
There is a prescribed format where you address the bank manager or loan officer.
Example: Respected/Dear Sir/Ma'am, I am (your name), a customer of your bank/ NBFC for (number of years). I would request that you provide the loan NOC for (reason). I hope my request will be met as soon as possible.
3.    Is NOC mandatory for a loan?
For big-ticket loans having an NOC is essential to gain the confidence of your future lenders. Also, this document safeguards you from getting into legal trouble down the line. 


We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Personal Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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