What is NOC and Benefits of NOC
Getting a loan proves to be a very simple task these days. With Bajaj Finserv, you can apply online for a loan, and get it approved within minutes. Buying your dream house, or your dream car, has never been easier! However, after you have repaid the last EMI for your loan, it is critical not to neglect the other loan closure formalities. You must remember that the procedure in place to close a loan is as important as that of applying for a loan.
What is an NOC for Loan Closure?
The NOC, or No Objection Certificate, is a legal document that states that you have paid all your EMIs and cleared all other outstanding loan dues. This document is issued by the lender and bears crucial information like your name, your loan account number, the address of your property, and date of loan closure amongst other details. Also, if you submitted any collateral while procuring the loan, the NOC will certify that your lender no longer has any right to it and it has been transferred back to you.
Generally, a bank or NBFC will send the NOC to the designated address after the loan formalities have been completed. However, if they fail to do so, or you have changed your residence, you can request your lender to give you the NOC for loan in person.
Why Do You Need an NOC?
To help you understand the importance of NOC for loan closure, here is a look at how it affects your financial health.
- When you’re applying for a loan, you’ll submit certain documents that will remain in the lender’s custody till the closure of the loan. An NOC will help you claim those documents when you’ve paid your dues.
- On the closure of the loan, an NOC needs to be submitted to CIBIL so that they have the correct credit history. This is important because when you apply for a fresh loan, the CIBIL report should state that you don’t have any outstanding loans.
- An NOC is also important if you want to avoid future discrepancies with the lender. For example, if you don’t take an NOC, the lender might ask you to repay some dues a few years down the line. To save yourself from such problems, always seek an NOC and keep it filed properly.
- Some financial firms may go a step further, and take legal action against you for not having settled your dues. An NOC is legal proof that you have made all your payments on time, and that the lender cannot take any legal action against you.
Which Loans Need NOC?
If you have taken a Home Loan or a car loan, you need to get an NOC on the closure of the loan account. In the case of a car loan, the lender will also issue an RTO form that states the cancellation of the hypothecation agreement. You need to submit this form at the RTO so that they can remove the liens mark on your vehicle and update details.
Apart from this, you should ask for an NOC when you have successfully closed a Business Loan, Loan Against Shares (LAS), and Loan Against Property (LAP). When you take an LAS, your shares will be under the ownership of the lender, serving as collateral. An NOC will give you full ownership on the shares and you can sell or invest in them as you like.
Likewise, in the case of an LAP, once you have the NOC, your property will be wholly under your ownership.
NOC Process for A Loan
Let us now look at the steps that should be followed in order to get your NOC.
- One you have completed all your outstanding loan payments, you have to write a letter to the lender to ask for the return of all your original documents, invoice copies, and an NOC. Usually the documents and the NOC are returned to you within a few working days.
- If you had taken a loan from Bajaj Finserv, then simply log into your online customer portal, view your loan details, select NOC, and download the document. It’s as simple as that! You can also choose to have it forwarded to your registered email address.
- If you had taken a Home Loan on an unregistered real estate property, then the procedure is the same as above. However, if the property is registered, then you and a representative from the financial institute have to go to the Registrar of Properties office together to get the lien removed and to get an NOC for Home Loan.
- In case of a car loan, the financial firm will issue an NOC, as well as an RTO form (Form 35). These need to be submitted to the Regional Transport Office and to your car insurance company.
Though it is the duty of the lender to issue an NOC, often financial firms overlook this step. As a borrower, you should definitely ensure that all the loan closure steps are diligently followed. That’s why it makes sense to team up with a firm, like Bajaj Finserv, which allows you to access all your documents online.
Remember, tying up loose ends is always a good idea. It ensures that you won’t have any financial ghosts from the past haunting your peace of mind in the future.