When purchasing a vehicle, we often opt to pay via a bank loan. When we purchase a vehicle via a bank loan, our vehicle acts as a guarantee against the borrowed amount. In other words, our vehicle becomes hypothecated to the bank until the entire loan amount is paid back to the bank. When registering such a vehicle at the RTO, you will have to enter all details about the hypothecation and other details of the bank. The hypothecation is mentioned clearly in your registration certificate once completed.
Now that you know all about the hypothecation process, you must wonder if it stays on your registration certificate forever. The answer is no. Hypothecation termination is possible and essential for your vehicle. In this article, we shall discuss the importance of hypothecation termination and the steps for hypothecation termination.
Need for Hypothecation Termination
Car hypothecation termination is a legal process that certifies that the lending bank no longer exercises any control over your vehicle. Hypothecation termination entails the transfer of your vehicle's ownership from the financing bank to you.
Terminating the hypothecation is especially crucial if you wish to sell your car. Without valid proof of hypothecation termination, you will not be able to sell your vehicle.
How to remove hypothecation?
Gone are the days of complicated registration and hypothecation processes. Like most other processes, hypothecation termination is a fairly simple procedure. It must be borne in mind that the process for hypothecation termination varies from state to state. However, there are a few simple steps for hypothecation termination from your registration certificate.
Step 1: Obtain all the necessary documents
Your bank will give you a letter on official letterhead saying that the loan has been closed once it has been repaid. The bank will issue a No Objection Certificate (NOC), which must be submitted to the RTO office. Along with the NOC, Form 35 (an application for termination of hypothecation) must be delivered in two copies to the RTO office. Finally, remember that the NOC typically has a 90-day validity period, so you must submit your application to the RTO before the document's expiration.
Here are the documents you need to submit along with Form 35 and NOC:
- Registration Certificate of your vehicle
- Copy of your Aadhar card
- Copy of your Insurance Policy
- Copy of Pollution Under Control (PUC) certificate.
Step 2: Submit all necessary documents to the RTO office
Once you have obtained all the necessary documents, visit the relevant RTO office. Request that the RTO's verification officer examine all of your documents. When the paperwork is submitted to the RTO, the vehicle owner can access his application number at the Parivahan site. The site allows you to get real-time information on the status of the termination of the hypothecation at the RTO.
Step 3: Verify and submit the Acceptance form and apply for a new registration certificate
You must proceed to the counter where you submitted your documents when visiting the RTO. Your paperwork will be returned with an "Acceptance Form" that lists all the information on your car's registration certificate. You must then submit the acceptance form to the officer after signing it. The cost of the new smart card must then be paid. After making the payment, you will receive a receipt and pick-up date for the Smart Card RC.
For any help regarding the registration certificate or FASTag services, use the Park+ app. The Park+ app also assists in smart parking services.