If you’ve ever taken out a personal loan, you already know that the procedure generally consists of four steps: applying for a loan, getting approved for a loan, receiving an instant personal loan, and making on-time loan repayments. For a totally online personal loan application procedure, you may use some of the top lending applications in the nation.
The process of getting a personal loan is almost over as you pay off all of your EMIs. Keep in mind that there is now just one thing left for you to complete. Finally, closing requirements must be completed in order to properly repay the loan.
Definition of Loan NOC
Certificate of no objection is known as a NOC. A loan NOC is a legal document that the lender issues to confirm that all of your unpaid debts have been satisfied and that there are no more debts due on the specified date.
When your lender issues you a personal loan NOC, your cycle of loan repayment is formally over. As a result, it shields you from any potential legal ramifications related to your debt.
Documents Needed to Request a NOC
The following documents are necessary in order to obtain a NOC:
- ID and proof of address
- Proof that you have paid all of your loan instalments
- Depending on the lender’s judgement, further restrictions may change.
How Can I Get the NOC for Loan Closure?
After all personal loan processes are finished, the lender typically sends the borrower the NOC for loan closing. This can be done digitally or by mail.
NOC Loan Closure Format
The format for a NOC for loan closure differs from lender to lender, but generally speaking, if you want to write your lender a letter or an email asking for a NOC, the format should be comparable to a formal letter. Describe your loan in full, show that all payments are current, and ask for a NOC. If you have a personal loan from a bank, the bank manager might get the letter.
The importance of a NOC for a loan
- Secures Legal Protection
Possessing the certificate is evidence that the loan has been properly concluded and that you have paid the lender any outstanding amounts. This helps to eliminate any legal ambiguities or miscommunications with the lender.
- Evidence of Repayment
An NOC serves as evidence that the fees have been paid. It assures that the bank won’t subsequently bother you with a notification that some dues are past due.
- Credit Score Assistance from NOC
You can provide the NOC to the credit bureau as proof and have your information changed if the information regarding your loan closure is not current in your credit report.
What occurs if a NOC is not present?
Simply simply, if you lack the NOC, you lack the documentation proving your payment. Your financial situation and personal life may suffer as a result.
1. Credit Rating is impacted
Your credit score may suffer if you lack a NOC. Future loan eligibility for you could not be guaranteed.
2. Time and Effort wasted
You can be requested to pay back the money you’ve already paid in full. You might waste significant time and effort trying to convince the lenders that you have paid off the debt since you don’t have the documentation of your payment.
3. Legal Difficulties
The lender may sue you for late payments since you have no documentation that you have paid off your debt.
4. Emotional Weariness
When the recovery agents call you or if you find yourself in legal trouble without a NOC to support your debt payments, you could feel emotionally spent and worn down.
Why is getting your Lender’s Loan NOC so important?
Obtaining a loan NOC from your lender is essential for the following reasons:
1. Loan NOC aids in the Preparation of Documents
A loan NOC is a legal document that certifies that all of your obligations have been fully paid. Inconvenient circumstances might arise if you fail to collect your loan NOC. For instance, your lender can inadvertently request that you pay back the fees you have already paid.
It is challenging to demonstrate that you have paid all of your obligations without any supporting evidence. Therefore, it is advised to get the necessary documentation from your lender, such as a loan NOC.
2. Acquiring a loan NOC and informing CIBIL about it will help you get Future Loans
If the lending firm fails to collect your loan NOC and inform CIBIL of it, it is your obligation, not that of your lender. If you don’t tell the credit bureau, it can be assumed that you aren’t paying back the loan. This might have a negative effect on your credit score and prevent you from obtaining loans in the future at favourable rates.
3. Loan NOC helps you avoid any Loan-Related Legal Implications
The worst-case situation is that your loan institution may file a lawsuit against you. It would also be difficult to substantiate your case in the absence of a loan NOC. You might 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 paperwork.
4. Loan NOC assists with your Application for a Balance Transfer
You absolutely must get a NOC from your current lender if you wish to apply for a balance transfer. Your new lender won’t be able to start the balance transfer process without a loan NOC.
Applying for a Loan NOC
The procedures for submitting a loan NOC application are listed below:
- You must first inform your lender that all of your instalments have been paid.
- You will be asked to provide papers, such as those that attest to your residence, your identification, loan-related paperwork, and loan statements that include information on the EMIs that have been paid.
- For your lender to verify information like your account number and identity, you must provide a check and proof of identification.
- Your loan account is closed after the necessary paperwork and formalities have been completed, and your lender issues you a loan NOC.
NOC Loan Closure Format
The format for a NOC for loan closure differs from lender to lender, but generally speaking, if you want to write your lender a letter or an email asking for a NOC, the format should be comparable to a formal letter.
Describe your loan in full, show that all payments are current, and ask for a NOC. If you have a personal loan from a bank, the bank manager might get the letter.
To repay your debt on time, you put a lot of effort into it. Obtaining a loan NOC from your lender, which might help you remain secure in the future, just requires a few easy actions.
A good CIBIL score is something you can get and keep by completing loan-related requirements on schedule. Future immediate personal loans from the top lending apps will be available to you at competitive rates thanks to your strong credit score.