Repaying a car loan in full is a relief, but many Indian borrowers find that their CIBIL report still shows the account as “active” even after closure. This mismatch can lower your credit score and make it harder to get future loans at good rates. If you have closed your car loan but CIBIL still shows an active account, here is what you should know and how to fix it.
Why CIBIL may still show the car loan as active
CIBIL does not update records on its own. It depends on information sent by banks and non-banking financial companies. A loan can continue to appear active if:
- The lender has not reported the closure or “paid” status to CIBIL.
- The lender reported the data, but CIBIL has not yet processed it.
- There is a small outstanding balance, such as pending interest or a processing charge, that keeps the account open.
- The loan account was not formally closed in the lender’s system despite full repayment.
The time taken for an update varies by lender and credit bureau, so you should verify the expected timeline with your bank or NBFC.
Documents to keep ready
Before contacting anyone, collect the following:
- No Objection Certificate (NOC) or loan closure letter from the lender
- Final repayment receipt or bank statement showing the last EMI payment
- Form 35 or hypothecation cancellation documents, if applicable
- Identity proof such as PAN or Aadhaar
- Recent CIBIL report showing the active account
Step-by-step process to fix it
- Contact your lender. Ask for written confirmation that the loan is closed and that the “paid” status has been or will be reported to CIBIL.
- Request an updated CIBIL report. You can buy a report directly from CIBIL or check through an authorised partner. Confirm whether the account status has changed.
- Raise a dispute with CIBIL. If the lender has confirmed closure but CIBIL still shows the account as active, file a dispute on the CIBIL website. Upload supporting documents such as the NOC and repayment proof.
- Follow up with the lender. CIBIL forwards disputes to the concerned lender for verification. Stay in touch with your lender until they respond to CIBIL.
- Check the corrected report. Once the dispute is resolved, download a fresh CIBIL report and verify that the car loan now shows as closed or paid.
Hypothecation cancellation and RC update
If your car was purchased on loan, the lender’s name may still appear as the hypothecatee in the vehicle’s Registration Certificate (RC). Even after loan repayment, you must apply for hypothecation cancellation at the Regional Transport Office (RTO). This usually requires:
- Loan closure letter or NOC from the lender
- Form 35, where applicable
- Insurance certificate, pollution under control certificate, and address proof
- RTO fees, which vary by state and vehicle category
RC update procedures and charges differ across states. Contact your local RTO or check the official transport department website for current requirements.
Why this matters for your credit score
An active loan on your credit report increases your total outstanding debt in the eyes of future lenders. It can affect your debt-to-income ratio and reduce your eligibility for home loans, personal loans, or new car loans. Getting the status corrected ensures your repayment history is reflected accurately.
| Action | Who to contact | Key document | ||||||
|---|---|---|---|---|---|---|---|---|
| Loan closure confirmation | Bank or NBFC | NOC / closure letter | CIBIL dispute | CIBIL | Repayment proof and NOC | Hypothecation cancellation | RTO | Form 35 and NOC |
Credit bureau corrections can take time, and procedures vary by lender and state. Verify all fees, timelines, and document requirements with your bank, NBFC, CIBIL, or the Regional Transport Office before acting.