Home and car loan closure checklist: Key things to remember

We consider interest rates and loan tenure when taking a home loan. But, we often overlook these aspects during loan closure. This can lead to significant problems. So, let's see what to consider during loan closure.

Many banks and NBFCs levy penalties or charges for prepaying loans. Home loans usually don't have penalties. But, prepaying car loans or personal loans can incur penalties, ranging from 1% to 5% of the outstanding loan amount. So, check foreclosure charges before prepaying.

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NOC stands for No Objection Certificate. It certifies complete loan repayment, indicating no outstanding dues and the closure of all transactions between the lender and borrower. Verify details like borrower's name, address, loan account number, and foreclosure details.

Several documents, especially property-related ones like the sale agreement, property deed, and NOC from the society or builder, are submitted for home loans. Ensure you retrieve all crucial documents after loan closure.

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The lien on the property needs removal. Otherwise, selling the property becomes problematic. Visit the registrar's office with a bank representative to remove the lien after home loan closure. For car loans, visit the RTO to remove the hypothecation. Check your CIBIL score after loan closure; timely repayment improves it.

Updating this information in the database is the bank's responsibility. However, delays can occur, showing outstanding loans even after full repayment, impacting the CIBIL score. A low CIBIL score hinders new loan applications. Note these points regardless of prepayment or on-time repayment.