When you avail of any loan from a bank or finance company, you sign an agreement whereby the amount borrowed, including any interest, will be returned in fixed installments in due course. After completely returning the loan amount and accrued interest, the lender issues a certificate termed No Objection Certificate (NOC). This certificate is an official statement that confirms you have successfully settled your loan, and the lender has no further claim or objection regarding your loan account.
An NOC is very important because it is proof of loan closure. With that in mind, the lender would not update your loan status to “closed” without the document, which may add complexity to your financial record in unnecessary ways. For example, your credit report would have been reflecting the loan as being active, which would harm your credit score and reduce your chances of getting subsequent loans or credit cards.
Another important role of NOC is to safeguard your property or asset in case the former was mortgaged to get the loan. In this context, if you have taken a home loan then the bank would have a lien on your property. With this NOC, a lien against the property gets erased, and full ownership of that property vests with you. The same will also save you from potential legal disputes or fake claims for the loan.
What is NOC?
No Objection Certificate or NOC is an official document issued by a bank or financial institution after you repay your loan in full. It states that the lending party has no objections and claims against you concerning the loan.
In other words, it is a statement that you have paid your dues in full, from the principal amount to the interest rate and any other charges levied. This means the NOC confirms your loan account for being closed helps update the credit report, and gets rid of any lien from property or vehicles that are pledged as collateral.
How many types of NOC are there?
Some common types include:
| Loan NOC | It is released by banks or lenders when you have paid off all loans. This document proves you owe no amount of pending dues. |
| Property NOC | The authorities or neighbors provide, stating that there is no objection to property-related activities like construction or sale. |
| Vehicle NOC | It can be obtained from the Regional Transport Office (RTO) after transferring a vehicle between two states or after completion of a car loan. |
| Employment NOC | Issued by employers in case an employee wants to seek permission for activities such as higher studies, freelancing, or visa applications. |
| Business NOC | Granted by government authorities to confirm no objections to starting or expanding a business. |
What are the benefits of getting NOC?
Getting a NOC is important for these reasons:
- It confirms repayment of the loan in entirety, along with all your dues, and the account’s closure.
- A NOC updates your credit report for the loan as settled which helps to improve your score.
- In case of any secured loans, such as home or car loans, the NOC ensures the lien on the property or vehicle is removed with full ownership.
- It saves you from future litigations or false claims from the lender regarding the loan.
- The NOC will reflect your clean financial record and help you to easily get loans or credit cards in the future.
- For instance, for a process like selling a property or transferring a vehicle, an NOC is requiring in most cases to finalize the process legally.
What is the importance of NOC?
It is indeed a very important No Objection Certificate as it makes sure that the proof shows that you have indeed accomplished your financial or legal obligation. So, for example, after getting a loan, there will be no outstanding on the loan; therefore, the full repayment has taken place. That in turn would lead to an updated credit report as well as enhancement in one’s credit score.
The NOC will ensure that a lien is removed on that asset, which you would have pledged as collateral if it was a car or property. This also secures you against any disputes or claims that the lender might raise in the future. In short, a NOC gives you financial clarity, secures your assets, and is necessary for clean financial records.
What information is included in NOC?
The typical information contained in a NOC includes:
- The name of the borrower or recipient person getting the NOC.
- Data relating to the loan may comprise the type of loan applied for, which may include a house loan, car loan, and so on. Also included is the account number corresponding to the loan.
- The amount borrowed and repaid over time.
- The date loan was finally settle.
- A mention that all dues are clear and nothing is pending against the applicant.
- The name and contact details of the bank or financial institution issuing the NOC.
- If you have pledged any asset (like a house or car), this section confirms that the lien on the asset is removed.
- The authorized signature of the lender or bank representative.
Why is No Objection Certificate required?
A No Objection Certificate or NOC is a type of certificate that usually you will need to get your loan or financial liability formally confirmed as settled. It is essentially need because it is your proof that you have paid all the dues and now the lender has no claim on you.
Without an NOC, your loan may still be reflected and active on your credit report, which may impact your credit score as well as your chances of getting other loans. It is also needed for the transfer of a vehicle and property because it will remove all legal issues or protests. In short, a No Objection Certificate is necessary to save your financial record and validate that everything is in order legally.
How to apply for NOC?
Follow these simple steps:
- First, ascertain that you have completely paid back the loan amount, including interest and fees if any. Your account must be free from all dues.
- Contact your bank or financial institution through which you had taken the loan. You may contact your bank in person, by email, or through their online portal.
- Obtain NOC from the bank: You may be mandatorily required to provide a form or get a record in writing that your loan has been repaid.
- They may ask you for loan evidence such as statements from your loan and a receipt proving that the loan is
- It will take some days after checking your payment and the status of your loan.
- The No Objection Certificate shall be issue, either in physical or digital form, from the lender upon verification of all this information. Safeguard this document for safekeeping in the future.
What is the process after getting No Objection Certificate?
Follow these steps:
- Check every detail on the NOC: name, loan account number, and date of loan closure to avoid any mistakes.
- Your credit report should be updated showing that the loan is closed and paid. This will enhance your credit score.
- If you have pledged any asset such as a house or car, the NOC will ensure that the lien is removed. Obtain documents regarding your property or vehicle with the lender to ensure complete ownership.
- Keep the No Objection Certificate safely with you because it acts as proof that the loan is completely paid.
- Notify the concerned offices viz., RTO for a car loan or local property office if the loan is taken against a property or car, to update records and encumbrances.
- If required, take steps to legally finalize the closure of loans, especially in the case of secured loans.
What to do if No Objection Certificate is delayed or denied?
Here’s what you can do:
- Ensure that the full amount is paying along with all dues and interest. Sometimes it gets delay because of some pending dues.
- Call up the bank or financial institution and ask them to check on the status of the No Objection Certificate. In case it gets delayed they are processing it or due to some issues which they have to get cleared.
- If the NOC is denied, ask the lender for a proper cause. It may be that there are pending payments due, errors in paper, or some issue in the account of your loan.
- If everything is pending, pay off pending payment, correct all issues in the paperwork, and thus resolve the issue with your lender to get the NOC.
- If you feel the denial or delay is unfair, then you can lodge a formal complaint with the customer service department of the bank or financial institution.
- In very few cases, where the lender refuses to give the NOC even after settling the loan, you can seek advice from a lawyer or consult a consumer forum to settle the matter.
What is the importance of NOC in loan closure?
The No Objection Certificate is very important in the loan closure process because it states that you have fully paid your loan and there are no dues left. It’s proof that the loan has been fully settled. Without the NOC, your loan might still be shown as “active” in your records, which may affect your credit score and make it difficult to obtain future loans or credit cards.
If you had mortgaged any property or used some asset as collateral for a loan, for example, a house or car, No Objection Certificate gives the lender a claim no more on it, protecting you from any future legal issues and potential disputes. In short words, NOC clears your financial records and provides you peace after loan closure.
Can NOC be obtained after loan settlement?
Yes, it is possible to avail of a No Objection Certificate after loan settlement. When you complete paying your loan with complete principal amounts, interest charges, and extra charges incurred, then you can ask the lender for NOC. The NOC released by the lender shows a message that your loan was closed and there is nothing due against you.
Once your loan account is settled with the lender before even placing such a request for the No Objection Certificate, it then safeguards you against future claims, and it becomes proof of complete payment of the loan once you receive it.
Conclusion
In a nutshell, an No Objection Certificate is an important document that proves the full settlement of a loan and that there are no further claims or obligations from the lender. It plays an important role in maintaining a clean financial record because it proves you have paid off the loan in full and that the lender has no objections.
Obtaining a NOC post settlement of the loan helps to update your credit report and remove any negative impact of an active loan. In addition, it removes all liens or claims made on the assets pledged as a guarantee, which gives you total ownership and peace of mind. Whether it is a mortgage loan, car loan, or any other type of loan, the NOC is a protective document to establish that there are no legal as well as financial issues upon the loan being repaid completely.
In case there is a delay or failure in getting the No Objection Certificate, one must get hold of the lender and resolve any pending issues. In case it is refused, clarification and necessary action must be taken for the NOC to be obtained.
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Frequently Asked Questions (FAQ’s)
Ans: Even though you might not receive an NOC, your loan will still be shown in your credit report as “active,” which would have implications for your credit score and other future loan applications. This will also create a problem if you want to sell or transfer any asset that was pledged as security.
Ans: If your NOC delays your NOC of yours, then call your lender to confirm your request status. Ensure your loan account is fully paying and ask them to update it. Rectify any error or pending dues for speedy processing.
Ans: Yes, a NOC can be refused if the loan is not repaid or if any dues are pending. A NOC can also be refused if there is some problem in the loan account or any discrepancy in the paperwork. If your NOC is refused, call your lender clarify the reasons for the refusal, and take necessary actions to correct it.
Ans: That varies, but most of the time it will take anywhere from days to weeks after the loan has been fully repaying. This will depend upon the process of the lender and how fast they can verify that the loan has closed.
Ans: Yes, if your loan was taking against property or assets, you will need the NOC because it is a document through which the lender confirms that he has no further claims on the property. Hence, you can sell, transfer, or mortgage your property without any problem.
