Personal loans are unsecured loans that offer you quick financial help to manage various expenses. It is extremely easy to apply online – you fill out the application, get the funds instantly in your bank account, and repay the amount in Equated Monthly Instalments (EMIs) Simple, isn’t it?
This ease of accessibility is one of the reasons why personal loans are becoming popular among Indians. In fact, as of October 2023, the outstanding value of these quick loans reached ₹45.51 lakh crore. This data highlights how millions of people trust personal loans for their financial needs.
However, the most crucial step that any borrower should not forget is to get a No Objection Certificate (NOC) after the loan is paid off.
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Understanding NOC meaning
An NOC is a legal document issued by banks to a borrower and signifies the completion of a loan repayment. It acts as tangible proof that you have fulfilled all financial obligations tied to the personal loan agreement, which may include repayment of the borrowed amount, accrued interest, and applicable fees and charges. The NOC frees you from all the loan-related responsibilities.
Why is it important to get your NOC for a loan?
Getting an NOC letter after paying off your personal loan is very crucial. Here is why:
Clearance of credit history: An NOC marks your loan as “closed,” and banks report this status to credit bureaus. This may impact your credit score positively and improve your future borrowing ability.
Keep accuracy in records: An NOC prompts banks to update your loan status in their records and at credit bureaus, hence keeping your credit report accurate for future financial activities.
Prevention of misuse of documents: Once a personal loan is cleared, an NOC gives you peace of mind that the loan account cannot be misused or reopened.
Prevents legal repercussions: Fulfilling NOC requirements is essential to avoid any future misunderstandings or conflicts with the bank.
Know how to obtain an NOC letter without any issues
Getting an NOC letter is only possible if you settle your loan dues in full. And to fulfil your loan obligations on time, it is crucial to choose the right bank that offers affordable rates and flexible repayment tenure.
Choosing IndusInd Bank Instant Personal Loans can be a wise decision, as the interest rates are competitive and the repayment tenure is flexible, ranging from 1 to 4 years. Budget-friendly EMIs and a convenient repayment tenure mean you can close your loan on time and obtain an NOC without issues.
Here are the additional benefits you get with IndusInd Bank Instant Personal Loans:
- 100% paperless process
- No stress about collateral or guarantors
- Request any amount between ₹30,000 and ₹5 lakh
- Seamless application process, quick processing, and speedy disbursal.
You can even use a personal loan monthly EMI calculator to calculate your future EMIs based on the loan amount, interest rate, and repayment duration. This can help you make a good repayment strategy and close your loan without any issues.
What could happen if you do not obtain an NOC letter?
Not obtaining an NOC letter for loan closure can expose you to various issues, as this serves as evidence that you have cleared all your past dues. Here are some unexpected issues you may face:
| Impact on credit score | The credit report might still show the loan as active without an NOC. This may affect your credit score in a negative way. |
| Legal issues | If your lender claims you have unpaid dues, you could face legal problems. This might lead to disputes, court visits, additional expenses, and damage to your financial reputation. |
| Difficulty in obtaining future loans | Incomplete documentation of past loan settlements may limit your chances of getting future loans. |
| Fraud risks | Without an NOC, there is a risk that your closed loan account could be reopened or, even worse, misused. |
Key takeaways
Timely repayments of EMIs and securing your NOC go hand-in-hand. By prioritising both aspects, you can have a seamless loan experience and enjoy the peace of mind that comes with a fully cleared debt.
An NOC formally closes the chapter of your existing loan and helps you pursue future financial opportunities with a clean record. It enhances your credibility as a borrower, saves you from possible future legal issues, and, most importantly, supports your financial health. Hence, make it a point to remember this simple yet crucial formality.
