When it comes to lending, adequate documentation plays a critical role. From the beginning of your loan application to the end of your loan tenure, everything needs to be documented to avoid any errors or missed payments. After repaying your loan EMI in full, it is advisable to collect your No Objection Certificate (NOC). Failing to do so could be detrimental in the future.
Read on to find out more about NOC after loan closure and its importance.
What is NOC after loan closure?
When your Personal Loan is approved, a loan agreement is signed by both the lender and the applicant. At the end of the loan tenure, it is assumed that the borrower has paid their last instalment. Then, a NOC is issued by the lender as legal proof that the borrower has paid all their EMIs and hence has paid the loan amount in full.
However, it is the borrower’s responsibility to collect the NOC after the loan is settled. If the borrower fails to or forgets to collect the NOC, there is no proof that the loan is paid in full. This can be detrimental when applying to get instant personal loan or any other credit instruments. Hence, it is important to collect your NOC after loan closure.
What is the process for collecting NOC?
A lender normally sends the NOC to your address once the loan is paid off. You may contact your lender if you do not receive it after a few days of complete payment of your loan. If you misplace it after you have received it, you may request your lender for a duplicate NOC. Sometimes due to errors in the residential address, the NOC can be sent to a different address. So, make sure that you thoroughly check your personal details provided while submitting the loan application.
What are the benefits of NOC after loan closure?
NOC after loan closure can help you in more than one way. Firstly, it acts as proof of loan repayment. Second, it will help you with the settlement of any irregularities or legal issues that might arise in the future related to the loan.
The NOC appears on your credit report, which helps you maintain a good credit score as well. It will help you in availing of loans in the future. Having a good credit score and a healthy credit history allows you to leverage various financial options. Also check out emi in personal loan calculator.
A No Objection Certificate (NOC) is an important document that signifies the complete repayment of loans by the borrower to the lender. It is crucial to collect the document to avoid falling into legal tussles with your lender. Such problems are emotionally and financially draining and time-consuming. They can also negatively impact your credit score which will make it difficult to take a loan in the future. Therefore, be mindful of collecting the NOC after you have repaid the loan fully.