It's easy to get a loan these days with pre-approval and documentation made extremely easy. With the Reserve Bank of India cutting interest rates, credit demand may increase. However, while many pay attention to the documentation and other procedures for availing a loan, you can only complete the process on payment and collecting the NOC of the loan.

It could be a two wheeler NOC, home loan NOC or personal loan NOC. An NOC means a No Objection Certificate and states that borrower has cleared all his loan dues and there is no outstanding that remains on the account. This also absolves all rights of the lender over the collateral.

1) Non submission of NOC can affect CIBIL score

Individuals have to make sure that they collect the No Objection Certificate and submit the same to CIBIL or make sure the bank does so.

If there is callousness on this count, it is highly likely that your CIBIL scores would get affected, as it would imply that you have defaulted on your loan. It is up to the individual to make sure the same is submitted.

2) Serves as proof of paid amount

The NOC serves as a proof that you have cleared all your dues. Maybe 10 years down the line, you would suddenly receive a notice saying that you have not cleared dues. This has happened and could very well happen.

3) NOC needed in case of vehicle loan

An NOC is a must in case of a vehicle loans as it would be required for transferring the vehicle during sale. It reveal to the Traffic Department that the vehicle has no loan pending and can be freely transferred. It also needs to be submitted to the car insurance company.

4) Avoids legal complications in the future

In case the bank or the financial institution suddenly end-up serving a legal notice, the NOC would serve as a good basis to show that the outstanding loan amounts have been paid.

After the completion of the loan, write a letter to the bank or the financial institution to issue a No Objection Certificate. Remember, they are unlikely to take responsibility for issuing the NOC. You have to be more proactive.

It is likely to be issued in a few days. For many companies you can download the NOC from the company or banks website and can submit the same.

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