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calenderJun 26, 2024

5 easy steps to remove Car Loan hypothecation

When you finally pay off your Car Loan, it's essential to complete one more crucial step: removing the hypothecation from your vehicle's registration. This process ensures that your car is legally recognised as entirely yours, free from any claims by the lender. Understanding how to remove Car Loan hypothecation is vital for all car owners.

What is Car Loan hypothecation?

Hypothecation is a legal process where your car is pledged as collateral to the lender until you fully repay the loan. The car remains in your possession, but the lender has the right to repossess it if you default on the loan. Once the loan is paid off, it is essential to remove this hypothecation to gain complete ownership.

Why remove Car Loan hypothecation?

  • Legal ownership: It ensures that you are the undisputed legal owner of the vehicle.
  • Ease of sale: A clear title makes it easier to sell or transfer ownership of the car.
  • Insurance: Hypothecation removal is also recorded in your car insurance policy, and the policy gets recorded in your name after the removal.
  • Loan opportunities: A clear title allows you to use the car as collateral for other loans.

Steps to remove Car Loan hypothecation

1. Obtain a No Objection certificate (NOC)
After you have cleared your Car Loan, the first step is to get a NOC from your lender. This certificate states that the lender has no claim on your car. Along with the NOC, you will also receive Form 35, which is required for hypothecation removal.

2. Collect the required documents
Prepare the following documents for submission to the Regional Transport Office (RTO):

  • Original Registration Certificate (RC)
  • Insurance policy of the car
  • Copy of the Car Loan closure statement
  • NOC and Form 35 from the lender
  • Address proof
  • Identity proof
  • PUC (Pollution Under Control) certificate
  • Copy of the Car Loan agreement

3. Submit documents to the RTO
Visit your local RTO with all the required documents. Fill out the necessary forms and submit them along with the documents. There might be a small fee for processing the hypothecation removal.

4. Inspection and verification
The RTO will inspect your documents and verify the information provided. They may also inspect the vehicle. This step ensures all documents are in order and the Car Loan is genuinely closed.

5. Updated registration certificate
Once the RTO is satisfied, they will issue a new Registration Certificate without the hypothecation mark. This updated RC is proof that the car is now solely owned by you, free from any lender claims.

Also Read: Car Loan hypothecation: All you need to know

Wrapping up

Removing Car Loan hypothecation is a vital step towards gaining full ownership of your vehicle. By understanding the process and ensuring you have all necessary documents, you can smoothly transition to being the undisputed owner of your car.

For those considering a New Car Loan, Axis Bank offers an attractive solution with up to 100% on-road funding, competitive Car Loan interest rates and flexible tenures. Additionally, you can use the Axis Bank Car Loan EMI Calculator to estimate your monthly payments and plan your finances effectively.

Apply for an Axis Bank New Car Loan and make your dream of owning a car come true.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.