How to Remove Hypothecation from RC after Bike Loan Closure

When you purchase a bike on loan, you hypothecate the vehicle to the bank or finance company until the loan is fully repaid. The lender’s name appears on your bike’s Registration Certificate (RC), indicating the hypothecation and making them the legal claim holder during the loan tenure. 

After repaying the loan, you will have to remove the hypothecation from the RC to gain complete ownership. Timely hypothecation removal ensures your vehicle documents remain updated and accurately reflect your sole ownership.

Hypothecation is a practice in which a lender uses your vehicle as collateral while providing you with a loan. Under this agreement, you are allowed to use the bike, but the lender’s name is officially recorded in your vehicle’s RC as a claim holder. 

This gives the lender legal rights over the vehicle until the full loan amount is repaid.

Removing hypothecation from your bike’s RC not only makes you the full owner but also provides several other benefits. Here are some of the key advantages of removing hypothecation:

• You gain complete ownership of your bike and have the freedom to sell, transfer, or modify it without requiring permission from the finance company

• It gives your bike a clear title, indicating that there are no outstanding loans or dues on the vehicle

• The resale value of your bike increases as buyers prefer vehicles that are free from any loan obligations

• You have the option to choose any insurance policy, often at a lower premium, as you are no longer bound by the insurance terms and policies as set by lender

• Future paperwork becomes easier, as there is no need to provide additional documents or obtain approvals from the bank

You can remove hypothecation from the RC both online and offline. Here is how you can remove hypothecation from RC online:

1. Log in to ‘vahan.parivahan.gov.in/vahaneservice/’ to begin the process

2. After logging in successfully, hover over ‘Online Services’ and select ‘Vehicle Related Services’

3. Enter your ‘Registration Number’ and ‘Chassis Number’, then click on Generate OTP

4. You will receive an OTP on your registered mobile number

5. Enter the OTP and click on ‘Submit’

6. Choose ‘Hypothecation Termination’ and click on Submit

7. Now under ‘Service Details’, which is available in ‘Status’ block, click on ‘Hypothecation Termination’

8. Click on ‘Delete’ (present as an icon)

9. Next, click on ‘Insurance Details’ under ‘Service Details’ in the ‘Status’ block and fill in the required details and click on ‘Submit’

10. Click on DMS (Upload Docs) to upload all necessary documents and select the files you want to upload and hit ‘Select’

11. When finished, click on the ‘x’ button at the top-right corner

12. Click on ‘Fee Details’ under ‘Service Details’ in the ‘Status block

13. Finally, click on ‘Make Payment’, then ‘Submit’, and proceed to pay the applicable fee

Here is how you can remove hypothecation from RC offline:

1. Collect important documents such as Form 35, NOC from the bank, original RC, insurance copy, and address proof

2. Visit your local RTO office and collect the application form for hypothecation removal

3. Fill out the form, attach the necessary documents, and submit them along with the required hypothecation removal fee

4. Wait for the RTO to verify your documents and process the application, which may take a few days or weeks

5. Once approved, visit the RTO to collect your updated RC

To remove hypothecation from the RC, you will need to submit the following documents:

• Form 35 — two copies, signed by the bank and the vehicle owner

• Attested copy of the Insurance Certificate

• Pollution Under Control Certificate (PUCC)

• Attested copy of PAN Card

• Original Registration Certificate (RC)

• No Dues Certificate from the bank confirming loan closure

When going through the hypothecation removal process, some small mistakes can cause delays. Here are a few common ones and how to avoid them:

• Submitting Incomplete Documents

You need to ensure that all required documents are in order before submission. Every form must be accurately filled in and duly signed. Missing or incomplete paperwork leads to delays in processing your application.

• Not Following Up with the RTO

After submitting your application, you have to follow up regularly with the RTO to track the status. Continuous follow-ups help avoid unnecessary delays and ensure that your RC is updated within the expected timeframe.

• Delaying the Process

As soon as you receive the NOC from your bank, you need to initiate the hypothecation removal process without any delay. The NOC remains valid only for a limited period, and failing to act promptly may result in the need to obtain a fresh one from the bank.

Hypothecation cancellation fees vary from state to state. To know the exact fee for your vehicle, you can visit your local RTO or check the official RTO portal of your state. You will have to pay a ₹1,500 hypothecation removal charge.

Failing to remove hypothecation from your RC after closing your bike loan can lead to several complications:

• You may face legal issues while selling or transferring the bike, as the lender is still listed as a co-owner

• Finding a buyer becomes difficult, as most buyers prefer vehicles without an active loan record on the RC

• Insurance claims may be delayed or rejected if hypothecation remains on the RC at the time of an accident or theft

To avoid delays and ensure a hassle-free hypothecation termination process, the following steps are essential:

• Gather all required documents beforehand to prevent last-minute complications

• Check the validity of your NOC and initiate the process well before it expires

• Complete all forms accurately, reviewing for any errors or missing information

• Maintain copies of all submitted documents for future reference

• Opt for the online application method, if available in your state, to save time and effort

Removing hypothecation from the bike’s RC after loan closure is necessary to establish full ownership. Follow the correct procedure and submit all necessary documents for a seamless process, whether online or offline. Timely action and consistent follow-ups contribute to faster approval.