What is a personal loan NOC and why is it important?

Here's what a NOC letter for a personal loan means and how important it is to have one
What is a personal loan NOC and why is it important?
5 min read
17 Mar 2023

A loan's life cycle can be divided into two main parts: having the loan approved and timely repayment of the loan. The loan repayment includes how many monthly payments you will make throughout the loan's term. However, your journey does not end here. There is an important second step that many borrowers overlook. This includes closure procedures where you must obtain a loan NOC letter from the lender.
So, let us understand what exactly is a personal loan NOC and why is it important?

What is NOC?

No Objection Certification (NOC) is a legal document, which clearly states that a borrower has made a complete payment of his loan amount and has settled all the outstanding debts to the lender. As the name suggests, It is issued at the end of the loan tenure. In legal terms,
an NOC is required to consider your loan tenure as officially completed. A loan NOC letter includes your name, loan data, the closing date, and a declaration that the whole loan outstanding, interest included, has been paid off by the borrower.

What is the importance of a No Objection Certificate?

NOC primarily suspends the lender's rights to possession of any collateral (if any). It formally ends the cycle of loan repayment and protects the borrower from further legal consequences.

Here are a few reasons why a loan clearance certificate is important:

  • The submission of the personal loan NOC to CIBIL or other credit bureaus nearly guarantees a healthy credit score.
  • It shields you from potential legal difficulties that can occur if there is any misunderstanding regarding the repayment of a personal loan.
  • Finally, it serves as evidence that the personal loan has been paid off and the borrower is no longer required to make any payments to the lender.

What are the consequences of not having a NOC?

There may be legal and financial consequences if a loan closure is not completed with the collection of a No Objection Certificate. Here are a few of them:

• It affects your credit score

A NOC letter is as important for your credit score as making on-time payments of your EMIs. If you do not have a NOC for a loan that you have borrowed and closed, it can hurt your credit score to the point where it is hard, or even impossible for you to get another loan in future.

• Causes a monetary loss

In some cases, if you fail to collect your loan clearance certificate, it can lead to much confusion and there are chances that the lender might ask you for the outstanding amount that you may have already paid.

• Causes a legal issue

Without a loan NOC letter, you do not have legal proof that you have paid your debts, and the firm that lent you the money can sue you for not paying on time. Therefore, spending a few minutes of your time for following up with the lender until receiving the document will help you in preventing the legal issues in future.

How to get your personal loan NOC letter online with Bajaj Finserv?

You can download your NOC statement by visiting our customer portal – My Account on Bajaj Finserv website.

  •  Sign-in to visit our customer portal.
  • Use our two-factor authentication and enter the OTP to sign-in.
  • Visit the ‘Document Center’ section to select the loan for which you want to view the NOC letter.
  • Click on ‘No Objection Certificate’ to download it.

Click here to learn more about personal loan, personal loan interest rates, eligibility criteria.  


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