Car Loan Paid Off! What Next?

[vishalpsali]

Hello All,

Finally I will have my car loan paid off in March 2016 .

Can someone provide guidance as to what I have to do next. What all needs to be done to ensure that the bank has no claim over my vehicle and any changes needed in insurance etc?

Thanks.

 

[Nairrk]

Re: CAR LOAN PAID OFF!! What Next??

Once the loan amount is fully paid off, obtain an NOC ( from the Bank - bank will give a letter confirming that full settlment has been done and they have no objection in lifting the Hypothecation on the Vehicle). Submit the NOC alongwith other documents to the RTO to get cancelled the Hypothecation marked on the RC.

 

[vishalpsali]

Re: CAR LOAN PAID OFF!! What Next??

Once the loan amount is fully paid off, obtain an NOC ( from the Bank - bank will give a letter confirming that full settlment has been done and they have no objection in lifting the Hypothecation on the Vehicle). Submit the NOC alongwith other documents to the RTO to get cancelled the Hypothecation marked on the RC.

Thanks a lot. Is there anything that I should also inform to the insurance company?

 

[Nairrk]

Re: CAR LOAN PAID OFF!! What Next??

Thanks a lot. Is there anything that I should also inform to the insurance company?

Once you get the HP cancelled RC, you may handover copy of same to the Insurance company so that they can also make note of that (loan completion).

 

[nag2fat]

Re: CAR LOAN PAID OFF!! What Next??

Hello All,

Finally I will have my car loan paid off in March 2016 .

Can someone provide guidance as to what I have to do next. What all needs to be done to ensure that the bank has no claim over my vehicle and any changes needed in insurance etc?

Thanks.

Many banks will automatically courier the NOC to your registered mail address. Take the NOC and cancel the hypothecation in your RTO. Then endorse the same in your insurance. Just call the customer care of your insurance provider and they will do it.

P.S. What many people do when the car loan gets over?? They change the car..

 

[vishalpsali]

Re: CAR LOAN PAID OFF!! What Next??

Many banks will automatically courier the NOC to your registered mail address. Take the NOC and cancel the hypothecation in your RTO. Then endorse the same in your insurance. Just call the customer care of your insurance provider and they will do it.

P.S. What many people do when the car loan gets over?? They change the car..

Thanks for the info. And you are very right they do change cars. But it seems I am gonna stick with mine for sometime now.

 

[Nairrk]

Re: CAR LOAN PAID OFF!! What Next??

Many banks will automatically courier the NOC to your registered mail address. Take the NOC and cancel the hypothecation in your RTO. Then endorse the same in your insurance. Just call the customer care of your insurance provider and they will do it.

P.S. What many people do when the car loan gets over?? They change the car..

Yes, many will do provided they get tax benefit or some other saving. I used to do in the past to get the depreciation benefit....

 

[vishalpsali]

Re: CAR LOAN PAID OFF!! What Next??

Yes, many will do provided they get tax benefit or some other saving. I used to do in the past to get the depreciation benefit....

Oh!! How can we benefit??
Can you explain with an example..??

 

[furious_driver]

Re: CAR LOAN PAID OFF!! What Next??

Yes, many will do provided they get tax benefit or some other saving. I used to do in the past to get the depreciation benefit....

Isn't that applicable only for businesses?

 

[Nairrk]

People those who are in business or profession can claim depreciation on vehicle and thereby save taxes. It is not applicable for salaried persons.!!

 

[incarnation]

once you pay the loan you have to appproach the bank for a loan completion letter one addressing the R.T.O. Under whose jurisdiction you have registered the vehicle and 2nd letter addressing the insurance company the vehicle is insured with. with these letters you will have to submit form no 35 which is avaialble in the R.T.O and get it signed and sealed by the bank manager.

once you have done the above steps you will have to submit the documents to R.T.O to cancel the hypothecation.
Documents Required
1. Original R.C. if its a Book R.C, copy of the R.C. if its a Card R.C.
2. Insurance Certificate
3. Emission certificate
4. Form No 35 Signed and sealed by the Bank Manager( from the bank were you had the loan)
5. Letter from the bank which states there is no due and the hypothecation can be terminated.

once you have submitted these documents the hypothecation will be terminated. now if yours is a book R.C. then you can see it in the book itself the loan has been terminated which will be written in read. however for card R.C. you will have to apply for something called a B-Extract Form which is nothing but R.C. Particulars. this B extract will have the start date of hypothecation and close date of hypothecation comes in handy when you are selling the car. which will act as proof that the loan has already been paid. Hope the info helps

 

[Prads]

Long ago we had a prob when one car loan was finished as we were levied with late payment charges which we had to pay to get the final clearance.

A year or so before that Electronic clearance was showing there is no money in our account & this happened for 3 months even when there was sufficient balance & a couple of other times,the manager spoke & sorted it out. But when it was time to get clearance the back Icici i believe said ,no there are late payment charges you have to pay them even when fault was not ours & it was the system fault between the banks.

Apparently some 12000 odd had to be paid out of annoyance as running around & arguing was not an option.

So if any face ECS faults make it clear to the bank & get it in writing that you are not to be blamed as your account had the balance required for transaction.

I hate car loans & if so like to place them in one bank where i usually deal to avoid any such hassles.

 

[IndicaDLS2002]

Ok I have an interesting question below.

Person buys car with the help of a bank loan.
Pays off the loan in an year & bank sends him NOC. NOC is kept safely.
However owner of car does not wish to sell the car & neither has time to invest in getting the RTO hypothecation cancelled.

In such a case how does the lack of getting the RTO hypothecation cancelled hamper/hinder the car owner in anyway?

Of course if & when current owner needs to sell the car the hypothecation will obviously need to be cancelled actually at that time the new owner will also need to transfer the car registration to their name, but until then apart from that whats other issues can the current car owner face if RTO hypothecation is not cancelled?

 

[Nairrk]

There is nothing wrong to drive a vehicle without cancelling the Hypothecation, but you must understand that in the records of RTO and Insurance, the vehicle still under Hypothecation and it may create some problem incase the vehicle meets with some accident or...?

Further, understand NOC issued by Banks will have a Validity period (90 Days or so) which mostly written on the NOC itself by some Banks. Anyhow, I doubt RTO will accept a NOC which is two year old or likewise....!!

 

[IndicaDLS2002]

NOC about Bank loan closure has a validity period? Well anything is possible but it doesn't make sense to have an expiry or fixed validity for such a NOC certificate honestly. By keeping a fixed validity what it says is there is a chance of the closed loan somehow becoming active again or the car owner again becomes liable again to owe the bank money for exactly that particular loan which is simply impossible, Yes it can be a brand new loan but thats a different story altogether, also I have never heard of a car improvement/renovation loan till date but you never know.