What is Hypothecation and Hypothecation Cancellation or Hypothecation Deletion?
Whenever a vehicle is purchased on loan, financed by a bank or an authorized financial institution, these terms are marked on the registration certificate (RC) of the vehicle. This process is termed as Hypothecation. When the loan or the standing liabilities are repayed, you can request the concerned department to remove these terms from the registration certificate in order to claim the complete ownership of the vehicle. This process is termed as Hypothecation Removal. There are various steps involved in the process of Hypothecation removal in India:-Collection of Form 35, No Objection Certificate (NOC) and the confirmation Letter from the bank which would be submitted in the RTO. It is mandatory to attain No Objection Certificate (NOC) from the bank or the financial institution just after the completion of loan Emi’s. Bank or the financial institution is also supposed to provide two copies of Form 35 (Hypothecation Deletion Form) and loan payment confirmation letter enclosed with No Objection Certificate (NOC). In this concern NOC is a certificate issued by the bank which certify that the bank has no objection in you to claim complete ownership of the vehicle as the loan has been repayed and all the formalities are done. It is a very mind-numbing and irritating process to collect documents from the bank especially if you are dealing with a bank of public sector. Firstly no bank would like to close your loan account easily as it would cost them business loss and secondly they would run you multiple times for very small formalities. Visiting Regional Transport Office to remove Hypothecation from RC will be another unique and disappointing experience for you. Interaction with the agents standing outside the Regional Transport Office (RTO) to sell their services and get their share will be a sad story and if not so then you are bound to make multiple visits of RTO. It is expected to collect following required documents before visiting Regional Transport Office (RTO):-
After completing the formalities of RTO, you will have to communicate with your vehicle insurance provider to update the Hypothecation Removal status. You have to submit a duly attested copy of No Objection Certificate (NOC) attained from the bank to the insurance company covering the comprehensive insurance of your vehicle so that the Hypothecation Removal status is also updated in their records too. After all these formalities you will get a written confirmation ensuring the removal of the Hypothecation from your car or vehicle.