Closing a personal loan is a moment of financial relief and accomplishment. However, the process doesn’t end with making the final payment. To truly safeguard your financial health, you must take certain post-loan-closure steps. Ignoring these actions can lead to unpleasant surprises, such as lingering debt records or errors affecting your credit score. Here’s a comprehensive guide to ensure your loan closure is smooth and secure.
1. Collect the No-Dues Certificate (NDC)
The most crucial document after paying off your personal loan is the No-Dues Certificate (NDC). This certificate, issued by your lender, confirms that you’ve paid your loan in full and that there’s no outstanding amount.
● Why it matters: The NDC serves as proof that your liability towards the loan is cleared. Without it, disputes could arise later.
● Action: Request the NDC immediately after the loan closure and keep it safely stored for future reference.
2. Check Your Credit Report
Your credit score reflects your financial credibility, and a closed loan should positively impact it. However, discrepancies like reflecting the loan as unpaid can hurt your score.
● Why it matters: An incorrect credit report can affect your ability to secure loans or credit cards in the future.
● Action: Wait about 30-45 days after loan closure and review your credit report. Ensure the status reflects “Closed” or “Settled.” Report any errors to the credit bureau and your lender for correction.
3. Retrieve Post-Dated Cheques or ECS Mandate
If you provided post-dated cheques or enabled an Electronic Clearing Service (ECS) mandate for loan repayment, ensure you retrieve unused cheques and cancel the ECS mandate.
● Why it matters: Unused post-dated cheques could be misused, and an active ECS mandate could lead to unnecessary deductions.
● Action: Confirm with your bank or lender that all repayment mechanisms are deactivated after the loan is closed.
4. Verify Closure in Bank Statements
Ensure that your final loan payment and closure are accurately reflected in your bank statements.
● Why it matters: Discrepancies in bank records can cause confusion and disputes later.
● Action: Cross-check the final payment and loan closure acknowledgment in your statements.
5. Preserve Loan Documents
Even after the loan is closed, keep all related documents such as the loan agreement, repayment schedule, and NDC securely.
● Why it matters: These documents might be required if disputes or errors arise in the future.
● Action: Maintain a physical and digital copy for easy access.
6. Understand Prepayment or Closure Fees
If you closed your loan early, review the statement to ensure all fees are correctly charged and settled.
● Why it matters: Miscalculation of fees could lead to disputes later.
● Action: Request a detailed statement of closure from your lender for confirmation.
7. Monitor Your Credit Score Regularly
After loan closure, your credit score should improve over time. Regular monitoring ensures that it reflects your timely payments and closure.
● Why it matters: A healthy credit score boosts your eligibility for future loans at favorable terms.
● Action: Use free or paid credit monitoring tools to stay informed.
Final Thoughts
Closing a personal loan is a critical step in your financial journey, but the post-closure process is just as important. By securing the necessary documents, verifying records, and monitoring your credit, you can protect your financial health and set yourself up for better financial opportunities in the future.
Take these steps to ensure that your hard work in repaying the loan doesn’t go unnoticed or misrepresented!
The author is the founder of BharatLoan. Fintech firm BharatLoan is a comprehensive digital lending service committed to assisting individuals in securing funds to reach their objectives.
