Why a no dues certificate is needed Closing a personal loan is the final step in your repayment journey, but without a No Dues Certificate (NDC) from your lender, the process remains incomplete. This document is a proof that the loan is paid in full and have no outstanding balance. Without it, clerical errors or delayed updates in the lender’s system could wrongly reflect unpaid dues, damaging your credit score and causing unnecessary legal or financial trouble.
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Protecting your credit score from misconceptions Banks and NBFCs can postpone reporting to the credit bureaus when all EMIs have been paid in full. If delayed or not reported at all, your account will be marked as loan unpaid, thereby decreasing your creditworthiness. Your NDC will act as evidence in dispute against such an error at the earliest. Lack of this report will discourage proving that the loan has indeed been repaid and thereby affect your future credit score.
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Prevention of future collection calls and conflicts Sometimes, due to lax administrative practices, loans closed in the lender's records look unpaid or overdue. This can lead to unjustified collection calls or even payment notices. A No Dues Certificate settles such issues once and for all with immediate effect as it is a written proof acceptable to authorities that the lender's dues are settled. It also safeguards you if your loan account is assigned to some other agency, thereby you will be free from harassment for a debt already paid.
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What the certificate should contain An appropriate NDC must contain your name, loan account number, the drawn amount, and an assurance that the account has been shut down against zero dues. It must be stamped using the lender's stamp and signed. Lenders may provide an electronic version of the NDC, as acceptable if sent through a registered mail ID. Verify all details beforehand to prevent future authentication issues.
How to obtain your no dues certificate Once you have made the final payment, request your lender or email them for NDC. Have payment receipt or acknowledgement document in front of you as you may have to attach it to speed up processing. The lenders will provide you with this document within 7 to 15 working days from the date of completion of payments. You must preserve the certificate, paper and electronic, so that you can show it wherever required for credit checking or the settlement of disputes.
