Consumer loan closed? Some Important Steps to Consider to Protect Your Financial Health

Closing a personal loan is a moment of financial relief and accomplishment. However, the process does not end with making the final payment. To truly protect your financial health, you must take certain steps after closing your loan. Ignoring these steps could lead to unpleasant surprises, such as lingering debt records or errors that affect your credit score. Here’s a detailed guide to help ensure a smooth and safe closing of your loan.

1. Obtain a No Duty Certificate (NDC).

The most important document after repaying a personal loan is the No Charge Certificate (NDC). This certificate, issued by your lender, verifies that you have repaid your loan in full and that you have no debt.

● Why it’s important: The NDC serves as proof that your loan liability has been repaid. Without this, disputes may arise later.

● Action: Request an NDC immediately after closing the loan and save it for future reference.

2. Check your credit report

Your credit score reflects your financial strength, and a closed loan should have a positive impact on it. However, discrepancies, such as a loan showing as unpaid, can hurt your score.

● Why this is important: An incorrect credit report can affect your ability to get loans or credit cards in the future.

● Action: Wait about 30-45 days after closing and review your credit report. Make sure the status is Closed or Resolved. Report any errors to the credit bureaus and to your lender for correction.

3. Get postdated checks or ECS mandate

If you provided post-dated checks or activated an Electronic Clearing Service (ECS) mandate for loan repayment, ensure that you receive the unused checks and cancel the ECS mandate.

● Why this is important: Unused post-dated checks may be misused and an active ECS mandate may result in unnecessary deductions.

● Action: Confirm with your bank or lender that all repayment arrangements are deactivated upon loan closing.

4. Checking the completeness of bank statements

Make sure your final loan payment and closing are accurately reflected on your bank statements.

● Why this is important: Discrepancies in bank statements can cause confusion and disputes later.

● Action: Double-check the final payment and loan closing confirmation on your statements.

5. Save your loan documents

Even after closing the loan, securely store all related documents such as the loan agreement, repayment schedule and NDC.

● Why this is important: These documents may be required if disputes or errors arise in the future.

● Action: Keep a physical and digital copy for easy access.

6. Understand prepayment or closing fees.

If you closed your loan early, review your statement to make sure all fees were charged and repaid correctly.

● Why this is important: Incorrectly calculating fees can lead to disputes later.

● Action: Request a detailed closing statement from your lender for confirmation.

7. Monitor your credit rating regularly

Once your loan is closed, your credit score should improve over time. Regular monitoring ensures it reflects your on-time payments and closings.

● Why it’s important: A good credit score increases your eligibility for future loans on favorable terms.

● Action: Use free or paid credit monitoring tools to stay informed.

Final Thoughts

Closing a personal loan is an important step in your financial journey, but the post-closing process is just as important. By securing the necessary documents, checking records, and monitoring your credit, you can protect your financial health and prepare for better financial opportunities in the future.

Take these steps to ensure your hard work in paying off your loan doesn’t go unnoticed or misrepresented!

The author is the founder of BharatLoan. Fintech company BharatLoan is an end-to-end digital lending service designed to help people get funds to achieve their goals.