You don’t completely own your car until you repay your Car Loan and remove the hypothecation from your registration certificate (RC). You will then get a new smart card. Here’s how it’s done.
People often make the mistake of thinking that the car is theirs as soon as their Car Loan is over. This is far from the truth. An oft-forgotten fact is that when a Car Loan is taken, the Registration Certificate (RC) is in the name of the lender who provides the Car Loan. You have essentially hypothecated your car to the financial institution from which you borrowed money to buy that car. Why hypothecation? This is done to ensure that you don’t sell the car until you repay the loan taken.
If you want the car to be truly yours, as soon as you finish repaying the Car Loan, you should complete the process of removing the hypothecation and getting the car transferred to your name. Yes, this can be done through an agent. But you needn’t waste your money by paying an agent for this. The process is really simple and cost-effective and you could do it by yourself. Here are the steps.
Step 1. Get the NOC, Form 35
As soon as you close your loan, your bank should provide you with the documents for loan closure. This will include a No Objection Certificate (NOC). Check your Car Loan documents to see within what time frame your lender has to send you the closure documents. Usually, the time frame is about a week or a fortnight.
Closure documents are those that will certify that you have repaid the whole loan and the loan account has been closed. These documents include the NOC stating that no amount is pending from you towards the loan. Another document is Form 35. This will state that your hypothecation agreement with the bank can be terminated.
The closure documents sent by the bank are generally valid for about 3-6 months from the date of issue unless otherwise stated in the document. If you closed your Car Loan a while ago, you might need to get a fresh set of documents as your Regional Transport Office (RTO) office might say that old documents are no longer valid. Also, you may want to get at least 2-3 copies of the NOC. One for yourself, one for the RTO and one for the Car Insurance company if they want it.
BB Tip: Ensure that the NOC is on the bank’s letterhead and you have a duplicate of Form 35.
Additional Reading: Foreclosing Your Car Loan: Is It A Good Idea?
Step 2. Gather other documents
Apart from the above-mentioned documents, you need to have other documents related to your car. This includes copies of your Car Insurance, PAN Card, address proof and Pollution Under Control (PUC) certificate. You also need your original registration certificate along with a copy of your driving license.
BB Tip: Wherever you have copies made of documents, you might want to get them attested. Usually, RTOs in cities like Delhi and Mumbai need you to get copies of the documents attested by a gazetted officer. And note that you will need Form 33 in case your current address is not the same as the address on your RC. You can staple all the copies together before submitting them for verification at the RTO.
Step 3. Visit your RTO
To cancel your hypothecation, you need to go to the RTO at which you registered the vehicle. It isn’t possible to do this at any other RTO, unfortunately.
Ask around to find out who the verification officer is. Submit all your documents to the verification officer at the RTO. The officer will enter the details into the system. Another officer will approve the details entered into the system. Then, you need to go to the payment counter to pay the hypothecation cancellation fee. Submit all your documents to the officer who approved your documents. Show the officer the proof of payment. You will be given a date on which you can come back to the RTO.
Additional Reading: Car Loan Application 101
There is an additional step for some RTOs. The RTO will provide you with an application letter for cancellation of hypothecation after verification. Submit these to the bank which granted you the Car Loan. Your bank will provide you with a confirmation letter containing an outward number. Given this number to the RTO. Note that some RTOs may not need this confirmation letter. Check with your RTO regarding this.
On the date specified by the officer, visit the RTO and collect your documents along with an ‘acceptance form’. You can make corrections on the acceptance form if details like your name is wrong. Sign the form and give it to the officer. Take all your documents and pay the fees for a fresh RC smart card. You might need to pay an additional fee for the change of address.
Most RTOs today give a smart card as the RC and not a book. The total fees generally range between Rs. 300 and Rs. 1,000 depending on your RTO. The RTO provides receipts for the fees paid. Some RTOs send the card by post while others might ask you to collect it from them. It usually takes 4 days to a month to get the new RC smart card.
Ta-da! You’re done. Congratulations! The car is now truly yours. All yours!
Psst… If you’re planning to sell your car off and get another chariot with a Car Loan, perhaps we can help?
Hello…i read this article….i am really in a trouble or confusd on my NOC from mumbai. My bike was financed by TATAcapital and i took the NOC from them after an year. with that docs i applied for NOC to transfer my bike to Chennai. One agent from Mumbai helped me to get these docs (1 vehicle informed form duly signed n sealed, 1 NOC and form 28)…but now in chennai, they are telling like loan hypothecation not cancelled …i checked with my agent from mumbai, he is telling that without hypothecation how will get a NOC…..what should i really do…
Hi Rahul,
We would love to help you but since your question is specific in nature, we suggest that you contact Tata Capital and your nearest RTO for help.
Cheers,
Team BankBazaar
If you have the SMART RC, check if there is mention of HP/LEASE and TATA capital name. If it is, that means the Chennai RTO require RC without HP/LEASE. So ask them. If yes then the only remaining option for you is cancel the hypothecation at Mumbai. But then the smart RC will be mailed to you to your old address not hand delivered.
Yes San…It’s mentioned so….But am just wondering that how could they issue me a NOC without Hp cancellation…And they returned old smart card (written as HP with TATA) with NOC as well….
Agent says that without Hp cancellation how will you get a NOC…Here in Chennai, RTO people r asking for HP cancellation….Don’t know what to do
Hi Rahul,
It is best that you talk to Tata Capital and get your HP cancelled and ask them to give you a new HP from Tata Capital in the place where you stay. Talk to Tata Capital. They should be able to help you.
Cheers,
Team BankBazaar
OK…Thanks team
Hi Rahul,
We are glad that we were able to help you.
Cheers,
Team BankBazaar
I have a basic question here, searched a lot on net but could not find. Hope you will answer this.
Once the loan is repaid, it is done.
Why do bank documents come with validity? Once loan is over, its over forever.
Is it a new way of business to get additional charges from those who miss to complete formalities?
Hi Meghana,
Once you close the loan and the bank issues a no dues certificate, the bank cannot impose any further charges.
Cheers,
Team BankBazaar
Hi, I missed to complete the process of removing the hypothecation within 90 days of receiving NOC from ICICI Back. Now, what process I would have to follow for the removal of hypothecation from my car? Please help and provide some directions.
Hi Vishal,
We suggest that you get in touch with ICICI Bank to check if you will need another NOC.
Cheers,
Team BankBazaar.
Hi I have applied for the removal of hypothetication of car in Bangalore. I have received the RC smart Card but i am not seeing the differences. I think they have sent back me the same RC.
Initial RC smart card also no where they have mentioned it is hypotheticated so i am not finding any differences , and i read in some blogs that they just remove the hypothetication from smart card system and they will resend the same old RC.
How to cross check that it is really removed?
Thanks
Hi Venu,
Usually, the hypothecation details are entered in the cip on the card and not on the card itself. Please check with your RTO as to how you can verify the removal of hypothecation.
Cheers,
Team BankBazaar
Great Article!!!
If you have bought a car with help of a car loan, and completely repaid the loan either by paying through to last EMI or prepaying for it, then the first thing you must do is get the vehicle transferred in your name from that of the bank. The procedure is called removal of hypothecation. This ensures that the bank does not have control over the car anymore, and you gain the rightful ownership to it.
After all these procedures, you will get rightful ownership of the car you had taken on car loan, with the bank ownership cancelled over the vehicle.
Hi Rajan, That’s some great advice. Thank you! Cheers, Team BankBazaar.
I HAVE PURCHASE CAR WITH BANK LOAN AND NOWHERE MENTIONED HP ON DELHI SMART CARD RC. PLEASE ADVISE THE REASON.
Hi Amit, The hypothecation is not mentioned on the smart card but is stored in the chip on the smart card.Cheers, Team BankBazaar.
Hi,
I have recently applied for NOC to change the address and RTO of my vehicle which is under hypothecation with my financier. I want to know for termination of Hypothecation(after repayment of loan) whether I need to approach to the original RTO at which the vehicle was registered during purchase or the new RTO where I am transferring my vehicle now.
Hi Prajanuranjan,
You will have to visit the RTO where you originally got your vehicle registered.
Cheers,
Team BankBazaar
Just today i submitted tbe documents in RTO, Bangalore for hypothecation cancellation. Steps I followed.
1. I had NOC from bank received in the year 2016. As it is invalid (NOC validity 3 months only) i approached my bank to get new NOC letter. I also took two copies of FORM 35 ( can download from internet). Got the new NOC letter and also endorsement on both copies of form 35.
2. I went to RTO with following documents
a) NOC letter
b) Form 35 two copies signed by me and bank
c) copy of RC card
d) Insurance certificate copy
e) emissions test certificate copy
f) self addressed envelop with stamps. You can get this in shops near RTO
g) Finally the original RC card inside a zip lock transparent cover
3. Met the officer in non transport section. He verified docs and asked me to pay Rs. 200 at the cash counter
4. Paid the fees and attached it along with other documents and submitted it to the same officer
5. I was given aknowledgement slip which stated that i will receive the RC card within 30days
Hoping to receive the RC card soon
Hi Kasi,
That’s great. Wish you all the best!
Cheers,
Team BankBazaar
RTO payment counter asked me to pay the fees online thru one guy who was sitting outside RTO office and was taking 300rs extra for just paying money online.
Pls help me with the path to make payment or any direct link for online payment
Thanks
Hi sachin sehgal,
The money has to be made at the RTO payment counter and not online. We suggest that you go to the payment counter and make the payment.
Cheers,
Team BankBazaar
Hi,
My paternal uncle purchased an i10 magna in May 2008 on hypothecation in New Delhi under his Department store name.
The car loan got cleared in 2013. However, he does not have any paper from the bank which states the car loan is over. He himself is not in Delhi now. He has lost original RC or never collected from the Bank, doesn’t remember now.
Now the car is with us and we want to sell it off. Though SMS Vahan service, we got to know the hypothecation is yet not removed and its from HDFC Bank. Though we don’t know from which branch.
Can someone please guide should how should we go about in apply for Duplicate RC, then how to find out which HDFC bank branch to obtain NOC, and finally sell the car (transfer ownership) ?
Best
Hi Sudhanshu,
Here’s a blog post that will help you apply for a duplicate RC – . We suggest that you walk into any HDFC Bank branch and give them the loan account number. They should be able to tell you the branch where the loan was issued. Once the hypothecation is removed, you can sell the car.
Cheers,
Team BankBazaar
Dear Team,
On my visit to RTO office which is in Mumbai, they have guided me to arrange for the document and make the payment online.
I have arranged all the required documents and trying to make the payment online. I have checked on YouTube on how to cancel/terminate the Hypothecation on the Government website “https://parivahan.gov.in/parivahan/”. Following are the steps to reach the payment page:-
1) On the 1st page under the menu, “Online Services”, click on “Vehicle Related Services”.
2) On the next step provide your Vehicle Registration Number and click on “Proceed” button.
3) Select the option of Misc(TO/CoA/HPA/HPC/HPT/DupRC)
4) On click at this link, it will take you to the page where we need provide our “Chassis no (last 5 digit)” and Enter mobile number and click on the button called Generate OTP.
5) You will receive the OTP on the mobile provided. Mentioned the same and click on button “Show Details”
Now here is the problem I am facing and need some help.
a) In Application selection there are six option ? (Transfer of ownership, Termination of Hypothecation, etc),,, need to know which option to select..
b) I am not sure which option to select, but I tried for “Termination of Hypothecation” and it showed my the bank name and it showed two rows in front of the bank name. with a button “Terminate”.
c) Should I click on “Terminate” buttons ?
d) Need to understand from here, what steps should I follow and make the payment..
Request the team or anybody who knows about the same to provide further guidance.
Thanks,
Hemang
Hi Hemang,
If you want to remove the hypothecation, you should choose the termination of hypothecation option and terminate the hypothecation that is relevant. If you want more clarity, we suggest you speak to the RTO.
Cheers,
Team BankBazaar
Dear Sir,
My Friend purchased a 2 Wheeler on Loan basis and repaid the same thru 20th Century Finance Corporation Ltd Hubli Branch Karnataka. But not received the N O C from the financier and the company also closed. Now i don’t know how to get the N O C from this financier. Because of this hp cancellation is pending. Need Guidance how to cancel the HP from RTO
Hi Ravi V,
You could get your loan account statement to your RTO and explain the situation to them. They might be able to help you.
Cheers,
Team BankBazaar
Hi, I have applied for hypothecation removal and got an acknowledgement for the same which is valid for 30 days. I need to go for an inter state trip during this period. Can I show the copy of RC along with the acknowledgement when I am asked to show the RC in other state? Will this work? Hoping for the response soon.
Hi Ashok,
Thanks for stopping by. As far as we know, you can show the RC and acknowledgement copy. Your RC will be valid even if the hypothecation has not been removed. We hope this information is helpful to you!
Cheers,
Team BankBazaar
My RC is taken by the RTO for the hypothecation removal. I don’t have original RC now. I have copy of RC and acknowledgement for hypothecation removal. Will this work for inter state trips?
Hi Ashok,
Thanks for stopping by. As far as we know, you can show the RC and acknowledgement copy. Your RC will be valid even if the hypothecation has not been removed. We hope this information is helpful to you!
Cheers,
Team BankBazaar
Hi,
I am going to terminate my bike hypothecation online (RTO – Ahmedabad) by paying Rs. 200/-. But, the query is that why I am going to select terminate then system asks to add the date of termination which I am not aware.
Can you help me that which date I should select to complete the process online. i.e. From (this date is available with me) to “TO” (this is not available). Should I select the issuance date of NOC?? Should I select any date?
Pl, help.
Hi Pradip,
Thanks for writing to us. As far as we know, you have to fill the form and submit it to your RTO. The facility may not be available online however. Please check the website you are using to fill the form. Hope this helps!
Cheers,
Team BankBazaar
Hi BB Team,
Thanks for your reply. As per below mentioned URL, user can pay hypothecation fees and do the other formality by visiting RTO office to proceed further.
https://vahan.parivahan.gov.in/vahanservice/vahan/ui/statevalidation/homepage.xhtml
My query is still unanswered, can you help me that which date I should select (“FROM” to “TO”) while going to terminate through online??
Thanks in advance.
Hi Pradip,
The date of termination of hypothecation is the date on which your loan got closed. As we are unable to access the form, please send us a screenshot of the form so that we can help you better. We hope this answers your query.
Cheers,
Team BankBazaar
Hi BB Team,
Thanks for the reply.
I have received an answer of my question from RTO office. I need to select the same date on which applicant is going to apply for termination of hypotehcation. i.e. same date (current date)
Thanks.
Pradip
Hi Pradip,
Thanks for getting in touch. We’re glad to know that your query has been answered. Keep reading our blogs for insights into the word of personal finance.
Cheers,
Team BankBazaar
I have been demanded by RTO – Maharashtra , see below list
Fill form online for Endorsement take print of it and pay online take 2 print of receipts
Form 17 – from finance institution (Bajaj Auto Finance) – Zerox/Print
Original Bank NOC
Original RC
Original Form 35 (2 copies duly signed by the bank and registered owner)
Copy of valid insurance – attested
Copy of PAN Card – attested
@bankbazar – plz add this in your above information. Many people will save their time.
Hi Vijay,
Thanks for sharing this with us. Have a nice day!
Cheers,
Team BankBazaar
Do we need to visit RTO office after applying online for removal of hypothecation in Maharashtra?