Car Loan Paid Off? Get Your New RC Delivered at Home – Know the Process!

If you’ve recently paid off your car loan, congratulations! You’re now the proud, official owner of your vehicle. But, before you start celebrating your full ownership, there’s an important step you need to take: updating your vehicle’s Registration Certificate (RC). This process involves removing the hypothecation status from your RC, which means your car loan lender no longer has a claim on your vehicle.

Once the loan is fully repaid, you’re entitled to a new RC that reflects you as the sole owner. You might even be able to have it delivered right to your door. In this article, we’ll guide you through the entire process, explaining everything from what you need to do to get the updated RC to the steps you’ll take to have it delivered to your home.

Car Loan Paid Off

Understanding the Process: Why You Need to Update Your RC

When you take out a car loan, the car’s RC is marked with “hypothecation.” This simply means that the lender has a claim on the vehicle until you repay the loan. Once you make the final payment and settle your car loan, this hypothecation status must be removed to ensure that the vehicle is legally yours.

Why Is This Step Important?

The RC of your vehicle is a critical document that serves as proof of ownership. Without the hypothecation removed, your vehicle’s legal status is incomplete, which could cause problems if you ever want to sell or transfer the car. Moreover, if you’re planning to upgrade or make any major modifications, having the updated RC will make the entire process smoother.

Let’s dive deeper into how you can get this task done efficiently.

Step-by-Step Guide: How to Remove Hypothecation from Your RC

Now that we’ve established the importance of updating your RC, let’s walk through the steps you need to follow to remove hypothecation and get your new RC delivered at home.

Step 1: Get Your No Objection Certificate (NOC)

Once your car loan is fully paid off, the first thing you need to do is obtain an official No Objection Certificate (NOC) from the lender. This document certifies that your loan has been fully repaid, and they no longer have a claim on the vehicle.

• Where to Get the NOC: Contact your bank or financial institution and request the NOC. Most lenders will issue this document shortly after you settle your dues.
• What Should the NOC Include? Ensure that the NOC includes essential details like the vehicle’s registration number, make, model, loan details, and the fact that the loan has been closed.

Step 2: Gather the Necessary Documents

Before you visit your local Regional Transport Office (RTO), you need to prepare a set of documents that will facilitate the RC update process. Here’s what you need:

1. Original Registration Certificate (RC)
2. No Objection Certificate (NOC) from the lender
3. Form 35 (duly signed by both you and the lender)
4. Proof of Insurance (for the vehicle)
5. Pollution Under Control (PUC) Certificate
6. Proof of Address (Aadhar card, utility bill, etc.)
7. Pencil Print of Chassis and Engine Number (this is a simple method of obtaining the imprint from your vehicle’s chassis)
8. Signature Identification Proof (Driver’s license, Aadhar, etc.)

Step 3: Visit the RTO

Once you’ve gathered all the documents, head to the RTO where your vehicle is registered. Some RTOs might offer the facility to process this request online, but a physical visit might be necessary in some cases.

• Submit the Documents: At the RTO counter, submit your documents along with Form 35. The RTO staff will verify your details and process your request.
• Fee Payment: There is a nominal fee for the hypothecation removal process. It typically costs around ₹100, but it’s a good idea to check with your local RTO as charges can vary.
• Inspection (If Required): In some regions, the RTO may ask for a physical inspection of the vehicle to ensure that everything is in order. Ensure your vehicle is available for inspection if needed.

Step 4: Wait for the New RC

Once the RTO accepts your documents and payment, they will start processing your request. The entire procedure usually takes around 15-20 days, depending on the RTO’s workload.

You will receive an updated RC without the hypothecation details, and it will reflect you as the sole owner. In some cases, you may need to visit the RTO to pick up the new RC. However, many RTOs now offer the option to have the RC delivered to your home.

Step 5: Receive Your Updated RC

After the processing period, your updated RC should be delivered to the address you’ve provided. If you opted for home delivery, check with your RTO for tracking or confirmation details.

Can You Complete This Process Online?

Yes, many RTOs now offer the facility to remove hypothecation online. Here’s how you can do it:

1. Visit the Official Parivahan Website: Go to Parivahan Sewa to begin the online process.
2. Select Your State and RTO: Choose your region and select the appropriate service for hypothecation removal.
3. Upload Documents: You’ll be required to upload scanned copies of all necessary documents, including the NOC.
4. Fee Payment: Pay the applicable fees online.
5. Track Your Request: After submission, you can track the status of your request through the portal.

While the process may vary slightly depending on your state, the online option saves you a trip to the RTO and makes the process much more convenient.

Additional Tips and Considerations

1. How to Handle Lenders Who Are Difficult to Reach

Some car loan lenders can take time to issue the NOC after the loan is paid off. If your lender is slow to respond or doesn’t provide the NOC, consider following up with them through official channels. You can also send a formal written request and keep a copy for your records. Additionally, if you financed the car through a non-banking financial company (NBFC), their processing times might be longer than banks, so patience is key.

2. What Happens if I Delay the Process?

If you delay removing the hypothecation from your RC, the lender’s claim on your vehicle technically remains in place. This can lead to issues if you want to sell, transfer, or modify your vehicle. It could also complicate matters if you need to apply for insurance or face any legal issues. Therefore, it’s advisable to update the RC as soon as possible after paying off your loan.

3. Can I Sell My Car Before Removing Hypothecation?

It’s highly recommended that you remove hypothecation from your RC before selling your car. Buyers will be hesitant to purchase a vehicle with an outstanding loan claim. You will also face difficulties in transferring the ownership without an updated RC.

4. What If the Vehicle Has Multiple Owners?

If the vehicle is registered under joint ownership and you paid off the loan, the hypothecation removal process is still the same. However, both owners need to sign the required documents (like Form 35) and provide proof of their identity and residence.

5. Can I Update the RC for a Second-Hand Car?

Yes! If you buy a second-hand car and the loan was paid off by the previous owner, you can still update the RC by following the same procedure. Ensure that the previous owner provides you with the NOC from their lender, and you can get the hypothecation removed in your name.

Frequently Asked Questions (FAQs)

1. How long does it take to remove hypothecation from my RC?

It typically takes 15-20 days for the RTO to process your request. This timeline can vary depending on your RTO’s workload.

2. Do I need to visit the RTO in person?

You can complete the process online through the Parivahan Sewa portal in many regions. However, a physical visit might be necessary in some cases.

3. What if I lose my NOC?

If you lose your NOC, you’ll need to contact your lender to request a duplicate. They may require additional documentation or fees to issue a new NOC.

4. Can I remove hypothecation from my RC without paying the loan in full?

No, you must pay off the car loan in full before you can remove hypothecation from your RC. The lender will only issue the NOC once all dues are settled.

5. What happens if I don’t remove hypothecation?

Until hypothecation is removed, the lender legally has a claim over your vehicle. This could cause problems if you want to sell, transfer, or modify your car.