Nearly everyone must have taken out a loan in their lifetime, whether we are talking about a house, personal, or car loan. The lifecycle of a loan consists of three parts: loan approval, loan repayment, and getting a NOC letter. This third part is often neglected. However, it’s one of the most important parts of the loan cycle. So what is a loan NOC letter, and why is it so important? We will cover everything you need to understand about this important document in this blog.
What is a NOC letter?
NOC stands for “No Objection Certificate.” This legal document implies that the borrower has repaid the entire loan and all dues have been cleared. This no-dues certificate is issued by the lender and proves that your loan cycle is truly over. The NOC letter is very important for your credit image and legal safety.
A NOC includes important details like your name, loan details, and details of loan closure. Most banking companies and NBFCs issue NOC letters to your address after you repay the loan. However, you need to work through the process and prioritise getting a NOC letter if one hasn’t been issued.
How to get a NOC letter?
In today’s digitised world, you don’t need to worry much. Banking institutes and NBFCs usually use systems that automatically generate NOC letters on completion of the loan tenure. However, there are certain procedures you need to follow to get a loan NOC letter.
- Send a letter or email your lender. Ask them to send your original documents, invoice copies, and a NOC letter. The closure format varies from lender to lender. So check with your lender, banking institute, and financial institute before requesting a loan NOC letter. Prepare a formal letter draft, include your loan details, and attach proof of loan payment. This process takes a few days. Keep in touch with the lender and get it issued ASAP.
- Submit the NOC copy to the registrar of properties when you take a home loan on the registered property. This step is important to remove the lien from the property. If not, the lender will continue to have ownership rights even after repaying the loan.
- If you have taken out a car loan, you will receive RTO Form 35 and a NOC. Submit copies of these documents to your insurance company and regional transport office.
A NOC letter is required for a home, personal, car, or business loan. It is also required in cases of availing loan against property and shares.
Why is the NOC letter so important?
- The NOC letter regulates your credit score. Submit NOC letters to credit bureaus to get a healthy credit score. When you have repaid all the EMIs on time, your CIBIL score needs to reflect that. Getting a NOC letter will improve your credit score, and hence, you will be seen as a credible person. We all know the benefits of a healthy credit score. If the NOC letter for previous loans isn’t taken, it will affect your future loan availing capability. If your credit report doesn’t reflect loan closure, submit a copy of the NOC to the bureau and get the credit report updated.
- A NOC certificate ensures legal safety. Without a loan NOC letter, there is no proof that the loan has been repaid. A NOC certificate indicates that the loan was successfully closed. It is a legal document that ensures that particular debts have been paid in full. It’s your safety net to avoid any legal discrepancies in the future. A NOC certificate will make sure that no financial company sues you because they gave you bad information.
- A NOC certificate is proof of repayment. A NOC letter is useful not only for availing further loans but also for purposes like immigration and employment. This no-dues certificate is much needed in your personal and professional life. A loan NOC letter is legal proof. No one could falsely claim outstanding dues when you have a NOC letter.
- A NOC letter guarantees peace of mind. Imagine waking up one day and getting a notice for pending dues. A NOC letter saves you from the mental trauma and harassment that may arise if the lender decides to sue you. A NOC letter will ensure mental safety and security amidst stressful times.
Advantages of having a NOC letter
- A NOC letter prevents discrepancies and misunderstandings that may arise regarding loan repayment.
- It safeguards you from false accusations of pending debts in the future.
- It avoids confusion between the lender and borrower in terms of pending dues.
- The transfer of ownership takes place with the help of a NOC letter.
- NOC letter increases your credibility in the market and your chances of availing of high-value loans without any hassles.
How to Recover a Missing NOC Letter
The NOC letter is the most important document. You cannot lose it. However, if the NOC letter goes missing by any chance, immediately file an FIR. Get in touch with the lender and ask them to generate a duplicate NOC. You will have to submit a copy of the FIR and loan documents to get the process started. Getting a duplicate NOC might take a few weeks, so stay patient.
Once you get a copy of the NOC, make sure it is well written and says “no objection.”
Conclusively, the NOC letter is important in a world run by credit. Don’t procrastinate if you don’t have the NOC for previously paid loans. Get in touch with the lenders and accelerate the process. The process is quite simple and requires basic documents. If you have recently repaid a loan, check the progress of the NOC certificate.
Get financially educated with Piramal Finance and avail easy personal loans without any hassles and with assured security at Piramal Finance.