The Importance of NOC After Closing Your Loan
An NOC is practically a no-dues certificate issued by a bank or lending company. Such a certification clearly mentions that the bank or lending body does not have any dues, and in the future, they will also not raise any demand for payment on the principal amount and interest.
Entrepreneurs and startup founders who raise funds through loans must ask for an NOC from the lenders or bank as soon as they have cleared their last EMIs (Equated Monthly Instalments) of the principal loan amount. Though the borrower may not need the NOC immediately, it can immensely help them in the future for similar transactions and time-to-time documentation purposes.
Read this blog to know the significance and meaning of getting a No Objection Certificate (NOC) upon closing your mortgage loan, car loan, or MSME loan, and how it can be useful to you.
Getting NOC After Loan Clearance: Meaning and Importance
An NOC is a legally valid document that testifies that you have no further payment liability on the loan taken, as you have made a full and final settlement of it.
You get the No Objection Certificate (NOC) after you have cleared or fully repaid the principal loan amount taken plus interest. You can obtain this document from the lending institution only when you do not have any outstanding dues.
NOC After Loan Clearance: Benefits at a Glance
- It proves your creditworthiness.
- It proves you are a good customer to the financial institution.
- It enables you to take further loans.
- Banks or financial institutions will always give you first preference in advancing loans.
- Your mortgaged property will be returned to you by the strength of the NOC.
- It can solve your liquidity crunch, as you can always furnish the NOC and seek further loans.
- You face no legal issues or hassles if you have the NOC.
Is NOC Required After Fully Repaying Your Loan Against a Mortgage, Car Loan, or MSME Loan?
This is an official no dues certificate issued by a commercial bank or any other lending body, certifying that you have fully repaid the loan amount along with interest accrued on it. Furthermore, the document also clearly mentions that you do not have any further repayment liability with the lending agency.
This legal document is valid across India and remains valid for a lifetime. If you have an NOC, the lending agency or bank (from which you borrowed the amount) cannot demand any further payments, either on the principal amount of the loan or the interest accrued on it. An NOC states that your loan account is clear. Once you obtain a copy of the NOC, make sure to preserve it safely—get Xerox copies, store physical copies securely, and keep digital copies in a pen drive or a folder on your PC for future reference.
An individual, businessman, or MSME often takes a loan for various purposes. It can include a car loan, home loan, or cash loan to meet different expenses to run an MSME company.
This is where the importance of a mortgage loan comes in. You avail of the loan against the mortgage. Your mortgaged papers or documents will be kept by the commercial bank or any other financial institution until you repay the complete principal amount plus interest dues.
Once you have paid back the loan amount and interest, the bank or financial institution is legally bound to issue you an NOC, testifying that you have no further dues.
NOC for Mortgage Loans: Key Legal Aspects
- It is legal proof that you have paid the mortgaged loan in full.
- No bank or lending company can make any further claim for dues of any kind.
- Release of mortgaged property, asset, or collateral.
- It proves the customer has a good credit score.
- It facilitates taking loans in the future.
This is CIBIL’s official site (https://www.cibil.com/freecibilscore) for checking your credit score free in India.
What to Do If I Lose My NOC?
If you lose your No Objection Certificate (NOC), then the first thing to do is to report the loss of the document by registering an FIR. Thereafter, approach your lender asking for a copy of NOC by filing the FIR and giving details of the loan taken by you. The lenders may keep you waiting a bit while dealing with the case, so remind them several times to have the NOC done.
Who Needs an NOC After Repaying a Loan?
You should note that getting an NOC or no dues certificate is a must for you, as this document not only proves that you have no loan or interest payment liabilities with a particular bank or lending company but also paves the way for further loan requests for business expansion or any other purposes.
Who Is/ Are Eligible for an NOC after Repaying a Loan?
- Those who have taken a car or vehicle loan.
- Those who have taken a home loan.
- MSMEs.
- Business owners.
- Manufacturers.
- Any other individual availing of a loan by mortgaging or giving collateral.
Conclusion
Taking a loan against the pledging of assets or collateral is very common all over the world. Besides MSMEs, traders, and business owners, individuals also need loans to meet various expenses like buying a car or a home. Such loan demands may also arise in the future. Therefore, it is very important that you obtain an NOC to enhance your credit score and creditworthiness.
After you’ve completely settled your mortgage loan, car loan, or MSME loan, it’s essential to get a No Objection Certificate (NOC) from the lender. This certificate is proof that you’ve settled all your dues and formally closed the loan, safeguarding you against any future conflicts or legal issues.
Whether it’s correcting your credit records or facilitating a smooth transfer of ownership, getting your NOC is important. We, at Kogta Financial, walk you through the whole process of closing your loan, so you get your NOC right away. Need assistance? Come see us today—we’re here to assist you!
Frequently Asked Questions (FAQs)
Ans.) All startups can avail of bank or institutional loans to run the company by mortgaging property, assets, and other collateral. Once you have fully paid the loan amount and interest dues, you can get an NOC.
Ans.) Yes! The bank or lending company is legally bound to issue you an NOC once you have fully repaid the loan amount plus the interest.
Ans.) Yes! You can demand an NOC, and the bank will issue it to you.
Ans.) No! Absolutely not! Upon clearing the loan and interest dues, you can demand the NOC, and the concerned bank or lending institution will issue it to you.
Ans.) You can simply request it from the bank or lending company, and they will issue it to you. In some cases, they may require you to apply for an NOC by submitting a written request stating that you need it.
