Simple Steps to Remove Hypothecation from Car's RC

Gaadi Bazaar
11 Jan 2024
3 Min Read
cars
105 Reads
Simple Steps to Remove Hypothecation from Car's RC

Table Of Content

  • What is the Process of Buying a Vehicle?
  • What is Hypothecation Removal?
  • What is Termination of Hypothecation?
  • What are the Documents Necessary for the Removal of Hypothecation?
  • How to Apply for Hypothecation Removal?
  • How To Collect the Acceptance Form?
  • How to Check the Status of Hypothecation Removal?
  • Final Word

What is the Process of Buying a Vehicle?

It is easy to get your hands on the latest automobiles with our various EMI options! People are now purchasing vehicles with faster processing periods and affordable interest rates! This has enhanced the number of financial institutions like banks and NBFCs willing to invest in customers who are ready to spend their money on vehicles. The lender legally owns the car unless the borrower pays off the loan amount. In short, the vehicle is "hypothecated" with the creditor till the last EMI is paid off. The details of the loan for your car are mentioned in the RC.

Once the EMI is paid off in full, the hypothecation must be removed from the vehicle's RC. An NOC must be obtained from the financier to get this removed. The entire process takes about a couple of weeks to complete. This is important in transferring ownership of the vehicle. Once the process is completed, a new registration certificate will be issued.

What is Hypothecation Removal?

The process involves transferring vehicle ownership from the financier to the buyer's name. The vehicle is hypothecated by the financier when it is bought. Once the loan is cleared, the ownership is transferred to the buyer's name.

If the loan is not paid off for an extended period, the financier has the legal right to repossess the vehicle and auction it off to clear any outstanding debt.

Termination of hypothecation is compulsory to become the legal owner of a vehicle bought through a loan. The procedure involves paperwork and fees and is necessary to avoid legal complications.

What is Termination of Hypothecation?

Once the loan tenure is complete, necessary documents must be collected to prove the completion of hypothecation. The financier usually provides an NOC and Form 35 (Notice of Termination of an Agreement of Hire-Purchase/Lease/Hypothecation) to authenticate inactive hypothecation. The financier will provide the NOC within two weeks of paying off the loan. The hypothecation must be removed, and a new RC must be applied within three months of the issuance of the NOC.

What are the Documents Necessary for the Removal of Hypothecation?

  • NOC, in the original copy
  • You sign Form 35, which has two copies (registered vehicle owner) and the lender.
  • Original RC book, insurance papers, along with related KYC documents of the applicant
  • Copy of PUC certificate
  • Photocopy of Form 60, Form 61, or PAN card

How to Apply for Hypothecation Removal?

Once all the necessary documents are kept handy, an application for the removal of hypothecation must be submitted at the nearest RTO. A fee must be paid for the procedure. Once the documents and the application form are verified, the RTO will ask the party to visit the office another day for further procedures.

How to Collect the Acceptance Form?

Upon being assigned the next date, an acceptance form must be collected that indicates acceptance of the removal of hypothecation of the car or vehicle. All data mentioned must be checked clearly.

How to Check the Status of Hypothecation Removal?

The procedure to remove hypothecation from the RC book differs from state to state in India. It is necessary to visit the nearest RTO to understand the procedure best. However, many states use the Parivahan web portal to deliver most of the services to citizens, including removing hypotheses from the old RC.

Final Word

Why is it essential to remove the hypothecation from your car's RC? You will not own the vehicle if this is not done. Secondly, you will not be able to sell your vehicle to anyone. Lastly, it is illegal not to get it done! Also, it will be difficult to claim insurance if the procedure is incomplete.

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About the Author

Gaadi Bazaar

Buying a vehicle is a big deal for many, and for all the right reasons. We are here only to make the whole process a whole lot simpler for you! India’s largest and most trusted vehicle marketplace, Gaadi Bazaar provides a comprehensive and wide range of new and pre-owned cars, bikes, trucks, tractors, and construction equipment – all under one roof, making buying and selling vehicles extremely convenient and updated! We are your automotive guide and we can help you pick and choose, for we believe in fulfilling your dreams – and we mean it! Enjoy a seamless and unchallenging experience with Gaadi Bazaar! The blogs on our website are written by professional writers who have extensive experience in blog writing specifically on vehicles and all things related to the automotive industry. The facts and figures mentioned are fact-checked and researched. Thank you for choosing Gaadi Bazaar for your automotive needs.

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Deepak Raja
This Blog is very useful for me, thanks for the Article.
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Deepak Raja
This Blog is very useful for me, thanks for the Article.
Admin Replied
Thanks for the Article.
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Deepak Raja
This Blog is very useful for me, thanks for the Article.
Admin Replied
Thanks for the Article.
Admin Replied
Thank you for the reply
Admin Replied
Welcome.
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