The Importance of NOC and Why You Need to Collect it Once the Loan is Closed
Seven years after Mr. Iyer closed a personal loan, he received numerous calls from recovery agents asking him to pay his loan. He was mentally tortured. And, when he received a legal notice to pay the loan, he was devastated.
Mr. Iyer had paid his loan but didn’t have the proof to show because he made the mistake of not collecting the NOC from the lender.
The lifecycle of a loan consists of 3 phases:
- Getting a loan
- Paying a loan
- Collecting a NOC from the bank once paid
Most of us go through the 2 phases diligently but conveniently forget an equally important third phase of the loan.
Mr. Iyer did the same.
What happens when you don’t have a NOC?
Simply put, when you don’t have the NOC, you don’t have the proof that you paid. The repercussions of this can affect your financial and personal life adversely.
Credit score gets affected
Not having a NOC can negatively impact your credit score. You may not be eligible to get loans in the future.
Loss of time and efforts
You may be asked to pay the outstanding amount that you have already paid. Because you don’t have the proof of your payment, you may lose valuable time and efforts to prove to the lenders that you have paid off the loan. Just what Mr. Iyer had to go through.
Since you have no proof of paying off your loan, the lender may sue you for not paying on time.
You may feel emotionally drained and worn-out when you receive calls from the recovery agents, or when you are caught in a legal turmoil and you don’t have a NOC to prove your loan repayment.
So, What is No Objection Certificate (NOC)?
A NOC for loan is a document issued by the lenders as proof that the borrower has paid all the dues. Once you pay off your loan, it’s important that you collect your NOC from the lender.
What are the advantages of a NOC?
- A no objection certificate is a document that helps clear any discrepancies and legal hassles that may arise in the future regarding repayment of the loan.
- A NOC submitted to the credit bureaus ensures a healthy credit score.
How to get the NOC?
After the loan is completely paid off, the bank/lender dispatches the NOC to your registered address. If you don’t have the document because you misplaced it or you didn’t receive it as you changed your address, contact the lender and request for one.
Does MoneyTap issue a personal loan NOC once you repay the outstanding?
MoneyTap is a revolving credit line for a lifetime. When you repay it in full, the entire credit line up to its limit is fully active for reuse.