New Delhi: After repaying the loan in full, it is necessary for people to remove the hypothecation from the RC. In the case of home loans, this process is quite simple, but in the case of car loans, this process is a bit complicated. Apart from the bank, one has to apply at the local traffic office as well. Here we are telling you what is hypothecation in car loan and what is the complete process to remove it from car insurance.

What is hypothesis?

There are many people who buy a car by taking a loan from the bank. In such a case, hypothecation is recorded on the vehicle's registration certificate. This means that the name of the finance company or bank from which you take a loan for the car is recorded in the record of your car's RC as well as in your car insurance. In such a case, after closing the car loan, you first have to get the hypothecation removed to sell it.

How to Remove Hypothecation in Car Insurance?

Whether you have a third-party plan or a comprehensive policy, you can remove hypothecation from your car insurance policy in a few steps, which are given below.

1. You can cancel the hypothecation after the loan is over. After this, you will have to apply to get NOC from the lender.
2. NOC provided by the lender and other documents like registration certificate, PUC certificate, valid car insurance policy and RTO details need to be submitted.
3. After you pay a requisite fee for the process, the work of removing hypothecation from the RC starts.
4. A new registration certificate is issued to you, on which the name of the lender is mentioned.
5. The new registration certificate issued to you by the RTO will carry your name as the owner of the vehicle.
6. After this, you have to submit the RC to your insurance company, so that they can start the work of removing the hypothecation from the insurance policy.
7. Removal of hypothecation from car insurance can be done at the time of renewal or with the help of an endorsement.