Thanks to the internet, personal loans are a lot easier to avail. You can apply online, quickly get your loan approved, receive the funds and repay the amount in timely instalments. Simple, isn’t it?
However, your journey doesn’t end here. There is a critical step that many borrowers are guilty of overlooking. This involves taking care of the loan closure formalities. For this, you must collect a loan NOC letter from the lender.
So, what is a personal loan NOCand why you should know about it? Let’s find out.
What is NOC for personal finance?
A No Objection Certificate or NOC is a legal document denoting complete repayment of your loan amount. Also known as a ‘No Dues Certificate’, the NOC explicitly states that you have cleared all outstanding loan dues.
Your lender issues the personal loan NOC letterat the end of your loan cycle and sends it to your designated address. It consists of important information, including loan details, your name, date of loan closure, property address, etc.
Once you pay off your EMIs and all loan-related charges, a NOC confirms that you have no further liability towards the lender. This signifies the formal closure of your loan.
Why is it important to get your NOC for loan?
Safeguards your credit score
In case your repayment information isn’t updated, it can severely harm your creditworthiness. This makes it difficult for you to get any loan in future. On the flip side, a NOC reflects positively on your credit report. You can submit your loan NOC to credit bureaus like CIBIL or CRISIL, get your credit history updated, and ensure a good credit score.
Additional Read: How much CIBIL Score Required for Personal Loan
Prevents legal repercussions
Without the NOC, you run the risk of facing legal complications. In case of discrepancies, a lender might sue you for not repaying on time. And if you don’t have any proof, the legal battle is unlikely to be in your favour. Even worse, you might have to pay an already paid amount.
Documents the paid amount
Without the NOC, you don’t have any record of your payments. It acts as legal proof that all outstanding dues are paid in full, and the borrower has no more repayment obligations.
Over to you
So, to avoid the troubles mentioned above, get your NOC today. After paying off your loan EMIs, write to your lender and request back all your invoice copies, original paperwork, and the NOC.
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