Notice of termination of an agreement of hire purchase/ lease / hypothecation

Notice of termination of an agreement of hire purchase

Notice of termination of an agreement of hire purchase/ lease / hypothecation

If you are one among those who own a car under a car loan and now want it to be foreclosed, then there are some do’s and don’t you need to know before you set to remove hypothecation from RC before car loan termination.

Closing a home loan is quite an easy task where you only need to liaise with some local banks to close down the loan. But that’s not the case of car loans. They are a little complex as you need to settle things and papers not just in banks, but also in the Regional Transport Office! <> The reason being that, when you bought the car under the loan, it was registered under the bank as they were the ones who paid the money and helped you to buy it out. So it’s obvious that the bank’s name would be endorsed in the registration certificate (RC) and you are supposed to change it when closing the loan.

Read along to find the specifics on how to remove hypothecation from RC after car loan termination.

What is meant by ‘removal of hypothecation’ and what are the procedures to be followed!

Removal of hypothecation means transferring the ownership of the car from the bank’s name to that of yours. When you tend to offer an entity as collateral for the debt you want to take on, that is what is meant by the term Hypothecation. Though the debtor need not hand over the physical custody of collateral, the lender is ‘hypothetically’ in control of it. If you as a debtor fail to perform what you are obliged to do, then the lender has the complete power to cease all your control over the collateral. A car loan or mortgage is a great instance of this.

Now it’s important to ensure that you have received the following two documents from the bank when you decide to close down the loan.

  1. A No Objection or No Dues certificate which shows that the bank has no objection in closing down the loan or removing the hypothecation.
  2. 2 copies of FORM 35 where termination of the hypothecation agreement between the lender (bank) and debtor (you) will be mentioned.
  3. Be aware that Bank NOC is usually valid for 3 months and is bound to expire after that. So make sure to submit an application to the RTO before the expiry of NOC.

Banks are presumed to take 2-3 weeks when they sent up the No Objection certificate. After being received with one, you could probably reach out to the RTO to remove hypothecation from the vehicle registration. But before hopping into the RTO, you ought to collect some documents and papers. Well, things don’t come that easy right! So yeah! We need to do some groundwork to let things flow smoothly.

The documents you need to collect are given below:


  1. Original Registration Certificate (RC)
  2. Original NOC
  3. 2 copies of form 35 ( duly signed by the registered owner)
  4. Driving license (self-attested copy)
  5. Insurance policy (self-attested copy)
  6. Owner’s aadhar card
  7. Owner’s photograph
  8. Print of payment receipt (only in case of online payment)
  9. PUC (copy)

The link to download the form 35 is:  Notice of termination of an agreement of hire purchase Form


Source Form 35