The Importance of NOC and Why You need to Collect it once the Loan is Closed
Published on : May 06, 2021

The system demands proof for every event, be it a birth, death, school leaving or the payment of a loan in full. Unless you have the No Objection Certificate (NOC), the event is not on record leaving you vulnerable to recovery agents chasing up and legal battles to be fought. Sounds messy, doesn’t it? The only way to avoid this mess is to ensure that every phase of the loan cycle is supported by the necessary documents.

Let us understand the importance of this document clearly since this can save you a lot of heartburn later.

Every loan life cycle has 3 phases

  1. Loan approval
  2. Loan Repayment
  3. NOC certificate  / Loan closure 

In the first stage, the borrower applies for a loan that is sanctioned by the lender. There is a loan agreement drawn up and duly signed by both parties. At the end of the loan tenure, the borrower completes the loan repayment. There are no more outstanding dues left for the borrower to clear. That means, there are no more transactions between the borrower and the lender. However, the onus is on the borrower to collect a No Objection Certificate from the lender. This is the document that confirms that the borrower has paid the loan in full and has no further liability. 

What happens if I forget to collect the NOC after paying off the loan?

If the borrower forgets to collect the NOC, there is no proof that the loan has been repaid in full. This can affect your life adversely in the following ways –

  • Damage to the Credit Score
  • Loss of time and efforts
  • Legal tussle
  • Emotional drain

Damage to the Credit Score

The credit score is the most important parameter that measures your creditworthiness. This is one of the key factors checked by lenders when you want to take a loan. If you forget to collect your NOC and a loan requirement crops up in future, you may be denied the same because of a lower credit score.

Loss of time and efforts

You may get reminders to pay up the outstanding amount. You will need to spend time and effort to locate the payment proof and justify that the payment has already been done on the due date. This can be nerve-racking and stressful.

Legal complications

If you ignore the lender’s messages or stop responding, the lender may initiate legal action for loan default. This can lead to a whole lot of confusion and explanation since legal issues take time to resolve.

Emotional Drain 

It can be mentally draining to have recovery agents following up with you day on day, asking you to pay up the loan. They may even have to make personal visits and that can be abasing especially since you have already paid your dues. A legal tussle also takes its toll on your mental health since it is difficult to prove your case without a No Objection Certificate.

What are the benefits of collecting the NOC?

  • A No Objection certificate is proof of complete repayment of the loan and can help to clear any discrepancies or legal issues in future.  
  • Holding a No Objection Certificate reflects on your credit information report and helps to keep your credit score healthy.
  • Having a healthy credit score keeps your financing options open.

What is the process to get the NOC?

Once the loan is completely paid off, the lender usually sends the NOC to the address provided in the loan document. If you do not receive it within a few days of the loan repayment, you should follow up with the lender. In case you misplace it or it has been dispatched to your old address, you can contact the lender and request a new one. The responsibility to collect the NOC lies with the borrower. So, it is in your best interest to collect the document on time.

What is the LoanTap policy on NOC?

When you take a personal loan from LoanTap and repay it in full, you are provided with a No Due Certificate that confirms that the loan is paid in full and no further payments are pending.

For all your loan requirements, you can visit and we will be happy to assist you. In conclusion, we can safely say that to avoid any hassles, it is advisable to collect the No Objection Certificate from the lender as soon as the repayment of the loan is complete assuring loan closure. Keep your documentation up to date and you will have no cause for worry.