Feb 25, 2021Personal Loan
The roadmap of your loan consists mainly of applying for a loan, the loan is approved, repaying the loan in a timely fashion. By repaying all the installments you have almost come to the finishing line. But your journey is not over, yet. The last leg of formally paying off the loan consists of completing all the closure formalities of the loan. Collecting a loan NOC is one of the most important formalities. This leads us to the next question:
A NOC is an important legal document issued by the lender that states that all the outstanding dues have been honored and no more dues are payable on a certain date. A personal loan NOC marks the formal closure from the cycle of repaying loans and hence, prevents legal repercussions in the future.
This is why it is important to collect the NOC from your lender:
A NOC helps in documenting the fact that all the dues have been paid in full. The failure on your part to collect it might lead to uncomfortable situations like the lender instructing you to repay the dues already repaid in the past. Proving that you have paid your dues in the absence of any documentation becomes difficult and hence, it is not advisable to delay the collection of the relevant documents.
In the absence of a NOC, the lending institution could initiate legal proceedings against you, and proving your case could prove to be an uphill task. Spending a few minutes of your time following up with the lender until you receive the document will go a long way in ensuring mental peace and preventing legal problems in the future.
It is your responsibility to collect the NOC and notify CIBIL or ensure that the lending company does so. Your failure to do so could be interpreted as a failure on your part in repaying the loan and can impact your score to an extent that it could be difficult or impossible for you to obtain access to loans at competitive rates in the future.4. Helps to Get a Balance Transfer
A NOC from your existing lender is absolutely necessary if you are applying for a balance transfer. Without this document, your new lender will not be able to initiate the process.
You are eligible to apply for a NOC only post repayment of the loan. All you need to do is notify your lender that all the installments have been paid. The documents required to be furnished include loan-related documents, documents to prove your identity and address, statements of the loan with the details of the installments that have been paid. Carry along a cheque and identity proof to enable your loan provider to verify details like your identity and account number. Post completion of these formalities, you can be assured that your loan account will be closed and that you will receive a NOC from your lender.
Being proactive and completing your formalities on time is a sure shot way to building and maintaining a good CIBIL score for the future. Happy borrowing!