Aditya Krishna is a 30-year-old software developer from Bangalore who is all set to buy a new house. He is ready with the liquid money to make the initial down payment. He approaches a bank for a home loan for the rest of the money. But then he learns from the banker that there is loan in his name that has been written off. At least, that is the status on his credit report. He recalls a Personal Loan he took for a family emergency a few years ago. He confirms to the banker that he had paid off the Personal Loan in full. The lender asks him to produce a no-objection certificate (NOC) issued by the previous lender. Otherwise, his home loan will not be processed.  This situation would not have arisen if all the legal documents were in place.

Read Blog: What is NOC and Benefits of NOC?


There are many other people like Aditya who believe that once the loan is repaid and closed, their obligation as a borrower is over. But you need to take one more step after clearing all your EMIs. Make sure to do the due diligence after closing the loan.

Follow these Steps after Closing the Personal Loan:

  • Have you paid off all the equated monthly instalments (EMIs)? Then ask the lender for a loan settlement letter as a proof of closure.
  • In case of pre-closure, the payment receipt for the final settlement is important. Keep that proof of payment safely. Along with it, keep a copy of all documents that you have submitted for settlement.
  • Suppose you pre-close your Personal Loan. Ensure that the next EMI does not hit your account. Inform your lender if there is any automatic transfer through your bank account ECS Sometimes, there could be a communication lag between the bank and the clearing centre. Pay attention and ensure there are no errors.
  • Many lenders issue a ‘no dues’ certificate over the counter. Usually, you get this if you pre-close a loan with cash payment.
  • A loan may close automatically after completion of tenure. Ensure you receive your no dues certificate or NOC from the lender. This is a legal document. It attests that you have repaid the loan and there is no obligation on your part.
  • Pay attention to the communications from your lender post closure. Normally, the lender sends the NOC to your registered address.
  • If you lose the NOC, contact your lender and place a request for the same.
  • Some lenders issue a statement of account after the settlement of Personal Loan. This statement is proof of your timely EMI payments.
  • CIBIL keeps track of all your financial transactions. It issues a credit report based on your payment history. It is better to get the copy of the CIBIL report after receiving the closure letter. With this, you can ensure that everything is reported correctly. You can check that there are no dues shown.
  • Keep all legal documents, like statement of account or NOC, safe.
  • Collect unused cheque leaves from your lender, if any.

Closing a Personal Loan involves some paperwork. Keep all documents handy. If you want a second Personal Loan, apply after you have all the legal papers in place. They are proof of your repayment ability and creditworthiness.

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