Home and car loan closure checklist: Key things to remember

Whether it's a home loan or a car loan, certain key aspects need attention during loan closure. Check foreclosure charges, NOC certificate, property documents, and CIBIL scores to avoid future problems.

Important things to know before closing a loan

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.

Home Loan

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.

Home Loan Interest Rates

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.

Home Loan Documents

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.

Car Loan

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.

Points to note during loan closure

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.