The loan process mainly consists of two main components - approval of the loan and repayment. However, collecting an NOC after loan closure is another important step that most borrowers overlook.
In this article, we take a look at NOC, its purpose, and how to upload NOC in CIBIL.
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NOC is a legal document issued by the lender to the borrower that states all the dues have been cleared by the borrower.
When a borrower avails a loan from any lender, be it a bank, financial institution, or online lender, he/she is obliged to repay the amount along with the interest rate within the agreed period. Once the loan is paid back in full, the lender issues a No Objection Certificate, or NOC to the borrower.
This document serves as the proof of repayment to the borrower.
There are some instances where the lender doesn’t change the status of your loan account to closed and reports the same to the credit bureaus. This is detrimental to your credit score and decreases your chances of getting a loan in the future.
If you come across such a scenario, you can directly contact the respective credit bureau and raise a dispute to correct your report. NOC plays a crucial role in this procedure.
CIBIL will contact the lender and once the data is verified, it will correct the report accordingly.
NOC functions as proof of loan closure and complete repayment. It protects the borrower from facing legal implications if the lender misrepresents the loan repayment history.
In such cases, the borrower can present the NOC to show proof of loan closure.
Another instance where NOC benefits the borrower is during score score issues. If the loan account is still displayed as active in the credit report, then the borrower can submit the NOC to the relevant credit bureau to dispute the claim and update the report.
Every borrower must make sure to collect the NOC from the lender once the loan is closed.
Once you have repaid your loan in its entirety to the lender, you will receive an NOC reflecting the same. However, some lenders don’t issue a NOC immediately. In such cases, you can follow the below method to obtain it.
A borrower who doesn’t collect the NOC after loan closure can face the following problems.
Borrowers without a NOC will see a reduction in their credit scores. Unless the lender provides an NOC, the loan is considered active. Hence, once the borrower stops the payments considering the loan closed, the repayments are deemed missed or late, adversely affecting the credit score.
At times, lenders can demand more from the borrower in the absence of an NOC. The lender can state the overdue amount un-repaid and collect more from the borrower. It will cause monetary loss and additional financial constraints.
Your lender can sue you for not clearing your dues on time if you don’t possess a NOC.
NOC or No Objection Certificate is an important document for every borrower. Once you have successfully closed the loan account, approach the lender, follow the above-mentioned procedure, and collect an NOC. Failure to collect the NOC after loan closure can lead to several legal and financial struggles.
Yes. Once you have successfully repaid the loan, moneyview closes your loan account and provides you with the NOC.
After you make all the outstanding payments on your loan, you need to write the lender a letter asking for the return of all your original documents, invoice copies, and the NOC. You will receive the documents and the NOC within a few working days.
If your NOC is lost or misplaced, lodge an FIR first. Next, request the lender for a duplicate NOC by submitting a copy of the FIR and other loan documents. However, duplicate NOC takes time, so follow up with the lender regularly.
NOC is issued only after the loan is repaid in full. For online loans, some lenders provide NOCs online. Banks and other offline lending institutions require the borrower to approach them in person to obtain the NOC.
Some lender NOCs are only valid for a certain amount of time. Understand how it impacts you and do the needful to ensure it doesn’t negatively affect you.
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