IMPORTANCE OF SECURING A NOC AFTER LOAN CLOSURE

What is NOC?

A No Objection Certificate (NOC) is a legally binding document issued by a bank or financial institution once a borrower has paid off their loan. The NOC certifies that all dues have been paid off (including any principal, interest, and charges) and that there are no claims against the asset secured by the loan. The NOC serves as a confirmation that a borrower has completed repayment of the loan and is required when updating records with the credit bureaus. A borrower who has an NOC will also need it for purposes of selling or transferring ownership of the asset or for resolving any disputes that might arise in connection with the loan.

Why is a NOC Important After Closing Your Loan?

Getting a No Objection Certificate (NOC) after loan closure is important for reasons such as: 

• It indicates that you have completed paying your loan and there aren't any doubts about any outstanding payment.
• It indicates that the lender doesn't have any rights over the property which was provided as collateral.
• It will improve your credit score as it notifies the credit bureau, like CIBIL, that the loan has been closed.
• It will allow you to sell or transfer ownership of the property without any limitation or hesitation.
• It will protect you from any legal or financial issues in the future.

How Does NOC Affect Your Credit Score?

Your credit score is based on how effectively you have paid your loans. If you have paid off a loan but your loan repayment is not updated because you did not obtain a No Objection Certificate (NOC), your credit report may display your loan account as “open” or “unpaid”. This can cause your credit score to decrease and affect your ability to secure new loans or obtain a credit card. It is vital that you send your NOC to the credit bureaus in order to maintain your good credit status.
 

Consequences of Not Securing an NOC

If you do not get your NOC, you may face:

• Ongoing lien on your property or vehicle, restricting your rights.
• Legal issues if the lender asserts that you owe them money when you have repaid the loan. 
• Challenges to later refinances or any other financial products as a result of a negative credit history. 
• Delays or refusal of insurance claims tied to the collateral. 

Conclusion

Obtaining a No Objection Certificate (NOC) after the closure of your loan account is essential to ensure you have repaid the loan, and to protect your financial position. Without an NOC, you may be faced with legal issues or a lower credit rating, which may also impact any future financial transactions. Getting NOC on time and storing it safely will give you clear ownership of your property, as well as a clear credit history. We at Hero FinCorp can assist you in facilitating the process of closing the loan easily.

Frequently Asked Questions

1. Is an NOC mandatory after loan closure?
 

Yes, you need an NOC, as it serves as a legal record to confirm you have repaid the full loan amount, and prevents any possible future disputes. Obtaining the NOC is important for your credit record, as well as future loans.

2. How long does it take to receive the NOC?

In general, after submitting your request for the NOC, it can take 7–14 working days from the date of full loan repayment for the lender to confirm your payment and issue the NOC. The lender will likely be able to confirm your payment sooner in case the process is online.

3. Can I get an NOC online?

Most lenders have online portals, which allow you to request and download the NOC letter immediately after loan closure, which makes the process faster and more efficient.

4. What should an NOC include?

Your NOC letter should contain the following:  the name of the borrower, loan account details, date of loan closure, confirmation that the full loan amount has been repaid (including interest), and a declaration that there are no dues remaining.

5. Will missing NOC affect my credit score?

Yes! You could run into legal issues for not obtaining an NOC, and it could delay the period for reporting your loan closure to credit bureaus, and may negatively impact your credit score.

Disclaimer: The information provided in this blog post is intended for informational purposes only. The content is based on research and opinions available at the time of writing. While we strive to ensure accuracy, we do not claim to be exhaustive or definitive. Readers are advised to independently verify any details mentioned here, such as specifications, features, and availability, before making any decisions. Hero FinCorp does not take responsibility for any discrepancies, inaccuracies, or changes that may occur after the publication of this blog. The choice to rely on the information presented herein is at the reader's discretion, and we recommend consulting official sources and experts for the most up-to-date and accurate information about the featured products.

About Hero Fincorp

Hero Fincorp offers a wide range of financial products including Personal Loans for personal needs, Business Loans to support business growth, Used Car Loans for purchasing pre-owned vehicles, Two-Wheeler Loans for bike financing, and Loan Against Property for leveraging real estate assets. We provide tailored solutions with quick processing, minimal paperwork, and flexible repayment options for smooth and convenient borrowing experience.