Loan NOC: Meaning, importance and how to get one

A loan NOC letter or loan closure certificate, though it may appear as a mere document, carries considerable significance within financial transactions. It is the most important document that officially ends your loan journey. Beyond repaying your EMIs on time, you need to consider some closing procedures, including obtaining the NOC. The document confirms that you have fulfilled all obligations and paid all your outstanding amounts to the lender. You receive it only after completing the loan repayment, thereby removing the lender's rights over the collateral.

What is an NOC for a loan?

NOC for a loan stands for a No Objection Certificate. It certifies that you've repaid the principal amount, interest, and any additional charges associated with your loan. This loan NOC certificate essentially declares you have no dues payable to the lender on that date and removes their lien on your assets (if applicable). You get the loan closure certificate when the loan cycle finishes. You need to check these details in the certificate:

• Your name
• Loan details
• Loan closure date
• Details of collateral, if any
• Declaration of full repayment, including principal and interest amount

Importance of No Objection Certificate letter in Loans

Securing a loan NOC letter holds immense value as it signifies the formal loan closure and serves as proof of successful repayment. Here are reasons why it's vital:

• Clear title: An NOC for a bank loan is proof of complete ownership of your assets, free from lender claims. This is useful if you plan on selling, transferring, or mortgaging assets used as collateral for the loan. Also, you will not have to face any legal notices or repayment penalties in the future.
• Improved credit score: Sometimes, your closed loans appear active in your credit report. Submitting the loan NOC letter to credit bureaus can clear the confusion, reflect responsible credit behaviour, and potentially boost your credit score. This unlocks access to better loan terms and interest rates in the future.
• Convenience: An NOC for a loan simplifies future financial transactions related to the asset linked to the loan. No one, not even your lender, can ask you to pay pending dues later. In cases where you're transferring your balance, an NOC from your existing lender will help initiate the process.

Consequences of not having a loan NOC letter

Not obtaining an NOC for loan closure can lead to unforeseen issues, as this is a piece of evidence that you have paid off your dues. Here are some issues you may face:

• Selling and transferring issues: You might face legal hurdles when selling or transferring an asset pledged for the loan without an NOC for the bank loan.
• Credit score hit: Credit bureaus might not reflect loan closure without an NOC for the loan, potentially impacting your credit score negatively. This could be a hindrance to any potential loans you plan to take in the future.
• Legal action: The lender might resort to legal action to recover outstanding dues, leading to unnecessary stress and financial burdens. So, you should have legal proof that you've paid all that was outstanding.

How to get your Personal Loan NOC letter online?

Fortunately, obtaining an NOC for a loan is often a smooth process, with many lenders now offering online options. Axis Bank sends a digital NOC to your email ID on the next working day after you close your Personal Loan and updates your CIBIL score within a month.

Here's a general process you need to follow to get your NOC online:

• Access your loan account online by visiting your lender's website and signing in through OTP or other authentication. Navigate to the dedicated sections for requesting NOCs for loan closure.
• Fill out and submit the online application form, providing necessary details like the loan account number and contact information.
• Make the payment (if applicable) to clear any outstanding charges or dues mentioned in the online application.
• Once the processing is complete, download or print your official loan NOC certificate document.

Documents required to avail of a loan NOC

Obtaining an NOC for a loan is necessary to prove that you have fully repaid the loan and have no outstanding dues. The following documents are typically required to apply for a loan NOC:

• Proof of identity: This could include your Aadhar card, PAN card, voter ID, or passport.
• Residential proof: Make sure to include the address where you want to receive the NOC.
• Confirmation of loan settlement: This could be a copy of your account statement showing that all loan instalments have been paid.
• Additional documents: These may vary depending on the lender, so it's best to ask them in advance.

It's recommended to have both the original and photocopies of these documents readily available to avoid any delays. You can also seek help from your lender for a smoother NOC processing experience.

Also Read: How to Get Your Personal Loan Approved Very Easily

Conclusion

Securing an NOC after repaying your loan is not just a procedure; it plays a significant role in your financial and legal aspects. The document declares you debt-free and safeguards your credit scores for seamless future financial transactions. It is important to understand its importance, as it can have legal repercussions. To your rescue, getting an NOC for a loan online is an easy and user-friendly process. Acquiring it proactively will help you close your current loan without any loopholes and navigate you confidently towards future financial opportunities.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.