When you close your loan account after completing your repayments and have nothing more to pay back to the bank or NBFC, is a great feeling that brings you lot of relief. Now you can sit back without any stress of your pending EMIs playing on your mind.
Broadly, there are three phases in a lifecycle of any loan –
- Getting the Loan
- Loan Repayment
- Collecting the NOC once your loan is closed from the bank or NBFC
Most of us follow the first two phases diligently but ignore the third phase of the loan.
What is a NOC –
A No Objection Certificate (NOC) for a loan is a document issued by the lenders as proof that the borrower has paid all the dues. Sometimes it is also referred as No Dues Certificate (NDC). It helps clear any discrepancies and legal hassles that may arise in the future regarding repayment of the loan.
Why NOC is important for you –
- In case you don’t have the NOC, you don’t have the proof that you paid back your loan amount. This might can have an effect on your financial and personal life.
- Credit score gets affected – Not having a NOC can negatively impact your credit score. You may not be eligible to get loans in the future. A NOC submitted to the credit bureaus can ensure you a healthy credit score.
- Loss of time and efforts – You may be asked to pay the outstanding amount that you have already paid. As you don’t have the proof of your payment, you might need to spend lot of time and efforts to prove to the lenders that you have paid off the loan.
- Legal complications – Since you have no proof of paying off your loan, the lender may sue you for not paying on time.
- Emotional exhaustion – If you don’t have a NOC to prove your loan repayment, you may feel emotionally drained and worn-out when you receive calls from the recovery agents or if you are caught in a legal matter.
How you can apply for a NOC –
Once you request NOC from your lender, it will be sent to your registered postal address which you have submitted while filling your loan application. However, if your address has changed, you would need to either update the address or request to receive the NOC in person from your lender.
After paying your last EMI, write a letter to the lender requesting that all original documents be returned to you along with any invoices and the NOC.
Few banks and NBFCs give you the option to download NOC or NDC directly from their website or mobile app after paying your last EMI. You just need to login into your customer portal with the required details and download the document. You can also forward it to your registered email address.