Settle your loan against securities online

Read this article to know how you can settle your loan against securities online
Settle your loan against securities online
3 min
23-April-2025
Loan settlement is a crucial financial step that allows borrowers to resolve their debt by paying a reduced amount to their lender, often in one lump sum or through structured payments. This option is typically explored when borrowers face financial challenges and are unable to meet the original terms of their loan agreement. Settling a loan can provide much-needed relief by freeing borrowers from their debt obligations and preventing further legal action or penalties. However, it is important to understand the potential implications, such as the impact on your credit score and the possibility of additional fees. The loan settlement process involves negotiating with the lender to arrive at a mutually agreeable amount, which may be lower than the original outstanding balance. By making informed decisions and understanding the necessary steps, you can successfully navigate a loan settlement and achieve financial peace of mind.

Steps to settle your loan against securities

1. Review your loan agreement

Understand the terms and conditions related to settlement, foreclosure, or prepayment


Check for any lock-in periods or clauses that restrict early closure


Identify charges like foreclosure fees, prepayment penalties, or admin costs


2. Calculate the outstanding loan balance

View the current outstanding balance through your lender’s customer portal or loan statement


Factor in unpaid interest, overdue EMIs, and additional charges


Compare the pledged asset’s value with the remaining loan amount to assess payment needs


3. Contact your lender for settlement options

Request a foreclosure quote that includes all payable charges


Discuss the possibility of a negotiated settlement, if eligible


Ensure settlement terms are provided in writing


Confirm payment timelines and the procedure for releasing pledged securities


4. Pay off the remaining loan amount

Make the final payment using secure methods like net banking, UPI, or NEFT


Complete payment through the official customer portal

Collect the payment receipt or acknowledgement


Request a No Objection Certificate (NOC) after payment confirmation


Ensure the pledged securities are unpledged and returned to your demat account

Documents required for settling your loan against securities

1. Loan agreement copy

A signed copy of the original loan agreement is essential to verify the loan terms, borrower details, and any clauses related to settlement or foreclosure.


2. Identity proof

Valid government-issued ID such as Aadhaar card, PAN card, Passport, or Voter ID is required to authenticate your identity as the borrower.


3. Address proof

Submit current address proof like utility bills, Aadhaar card, Passport, or bank statement to validate your residential details.


4. Loan account statement

The latest statement showing the outstanding balance, interest due, and any overdue EMIs helps in determining the final settlement amount.


5. Foreclosure or settlement letter (if applicable)

If you’ve initiated a settlement request, obtain an official foreclosure or settlement letter from the lender outlining the total payable amount and terms.


6. Bank account details

Provide bank account details or a cancelled cheque for processing the final payment and receiving any refunds, if applicable.


7. Power of attorney (if applicable)

If someone else is settling the loan on your behalf, a notarised power of attorney is required along with their identity proof.


8. Pledge confirmation document

Include the pledge agreement or confirmation document showing the securities pledged against the loan.


9. Demat account details

Required for unpledging and transferring the securities back to your account once the loan is settled.


10. Payment receipt (post-payment)

Once you make the final payment, retain and submit a copy of the payment receipt to confirm the transaction.


11. No Objection Certificate (NOC) request form

Some lenders may ask you to fill a formal request for issuing the NOC after full settlement of the loan.


12. Communication proof

Keep a record of all official communication with your lender regarding the settlement request—emails, letters, or call logs—for future reference.

Common challenges when settling a loan against securities

1. Incomplete understanding of settlement terms

Many borrowers struggle with unclear terms, including applicable fees, settlement conditions, or foreclosure penalties, leading to confusion or disputes.


2. Hidden charges

Unexpected charges like foreclosure fees, service charges, or overdue penalties may inflate the total amount to be paid at the time of settlement.


3. Difficulty in calculating final payable amount

Borrowers often find it challenging to calculate the total outstanding, including pending interest, penalties, and taxes, resulting in payment delays.


4. Limited communication from lenders

Delays in receiving settlement quotes or NOC due to slow response from lenders can prolong the process and cause frustration.


5. Issues with unpledging securities

Even after full repayment, the unpledging of securities can face delays due to backend formalities or incomplete documentation.


6. Unavailability of required documents

Missing essential documents like loan statements, identity proof, or pledge confirmation can delay or disrupt the settlement process.


7. Errors in account or personal information

Mismatches in personal or bank account details can lead to payment issues or delays in releasing securities.


8. Poor timing of settlement

Settling close to the due date may cause additional interest accrual or EMI charges, increasing the cost unnecessarily.


9. Credit score impact

In some cases, especially with negotiated settlements, the credit report may reflect it as “settled” rather than “closed,” slightly affecting credit score.


10. Lack of clarity on refunds or excess payments

If extra amounts are paid during settlement, borrowers may face delays in receiving refunds due to unclear policies or poor coordination.


11. Discrepancies in settlement communication

Miscommunication between borrower and lender regarding final dues or settlement mode can lead to confusion or duplicate payment issues.


12. Delayed issuance of NOC

Even after completing all formalities, the No Objection Certificate might take time, preventing quick closure and asset release.

Advantages of settling your loan against securities early

1. Save on interest costs

Early settlement helps you save significantly on the total interest outgo, as interest is calculated on the outstanding balance for the loan duration.


2. Improves overall credit score

Timely settlement of your loan reflects positively on your credit report, helping boost your creditworthiness and chances of getting future loans.


3. Reduces financial burden

Closing your loan early reduces monthly liabilities, allowing better financial planning and increased cash flow for other priorities.


4. Quick release of securities

Once the loan is settled, the pledged securities are unpledged and returned to your demat account, giving you back full control of your investments.


5. Peace of mind

Paying off the loan before tenure ends removes the constant reminder of EMI deductions and ensures peace of mind regarding repayment commitments.


6. No Risk of EMI default

Early closure eliminates the risk of missing future EMIs, which can lead to penalties or negative impacts on your credit history.


7. Simplifies financial portfolio

With one less active liability, your financial records become cleaner and easier to manage, especially useful when applying for other financial products.


8. Better investment opportunities

Upon unpledging, you can use the returned securities for reinvestment or liquidate them for higher-return opportunities.


9. Avoids future interest rate hikes

If your LAS has a floating interest rate, settling early helps you avoid potential increases in rates during the loan tenure.


10. Faster NOC issuance

Early settlement helps initiate a quicker process for getting the No Objection Certificate, essential for closure and future documentation.


11. Access to new loan offers

Borrowers who close their existing loans early may become eligible for better interest rates or higher loan amounts in future credit applications.


12. Easy tracking through customer portal

You can easily check your outstanding loan and initiate early repayment via the Bajaj Finserv customer portal for added convenience.


13. Support from Bajaj Finance customer service number

If you need any help during the early settlement process, Bajaj Finance customer support is available to guide you through every step.

Conclusion

Settling your Loan Against Securities early is a smart financial move that offers multiple benefits—from saving on interest costs to improving your credit score and regaining control over your pledged investments. It simplifies your financial obligations and gives you peace of mind by eliminating monthly EMI stress. Additionally, early settlement opens doors to better financial opportunities and new credit offers. With user-friendly digital tools like the customer portal and prompt support via the Bajaj Finance customer service number, the process is hassle-free and efficient. Make the most of your investments by planning an early loan closure today.

Frequently asked questions

Can I settle my Loan Against Securities early?
Yes, you can settle your Loan Against Securities early by paying the outstanding amount and applicable charges, subject to your lender’s foreclosure terms and conditions.

How do I get the NOC (No Objection Certificate) after a Loan Against Securities settlement?
After settling your loan, the lender will issue the NOC upon confirmation of full payment. You can request it via email, branch visit, or the customer portal.

What happens if I miss the Loan Against Securities settlement deadline?
Missing the deadline may lead to penalty charges, additional interest, or delayed unpledging of securities, and it could negatively impact your credit profile.

Can I negotiate a lower settlement amount?
In certain cases, especially during financial hardship, you may negotiate a reduced settlement amount, but it depends entirely on your lender’s policies and approval.

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