Car Loan NOC on Loan Closure: How to Get It Online

Summary: A car loan NOC confirms that the vehicle loan has been closed, but the process does not end there. Borrowers also need to remove the lender’s hypothecation entry from the RC through the applicable RTO or VAHAN process.

A car loan NOC comes after you have fully repaid the vehicle loan. It confirms that the lender has cleared the loan. But the NOC does not remove the financier’s hypothecation from the Registration Certificate (RC).

The loan account and the RC are updated separately. The lender closes the loan account after the final EMI, foreclosure amount and other dues are cleared. The hypothecation entry, however, remains on the RC until it is removed separately. Where available, you can start this process through VAHAN. The exact steps depend on the state and RTO.

The post-closure process also involves documents with different purposes. These include the NOC, a closure letter or certificate and Form 35. The closure letter or certificate confirms the loan-account status. Form 35, meanwhile, is used for the hypothecation-termination application.

The NOC connects these stages, so the first step is to understand what it is, followed by how to obtain it and use it for the RC update.

What is a Car Loan NOC?

A car loan NOC (No Objection Certificate), is issued after full repayment of a vehicle loan. It confirms that the dues are cleared. It also confirms the lender has no objection to removing the financier’s hypothecation entry from the RC.

Paying the final EMI closes your repayment obligation, but the RC does not change at the same time. If the hypothecation entry remains, the financier will still appear on the RC until the registering authority removes it.

You may also receive a car loan closure certificate or closure letter after repayment. Since lenders may use these terms differently, check whether the document confirms loan closure, lender clearance or both.

NOC vs Loan Closure Letter: What You Receive

The documents issued after repayment perform different functions:

• Car loan closure letter: A car loan closure letter records that the loan account has been closed after dues are paid.
• NOC: A NOC for car loan confirms the lender’s no-objection or due-clearance position. It also supports the hypothecation-removal process.
• Form 35: This prescribed notice terminates a hire-purchase, lease, or hypothecation agreement in the vehicle-registration record. The official form is made in duplicate and signed by the registered owner and financier.

Lenders may use terms such as closure letter and car loan closure certificate differently, so check what each document confirms. Form 35 serves a different purpose because it is used when the hypothecation entry is removed from the RC.

Once the loan account is closed, the next step is to obtain the NOC and other closure documents.

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How to Get Your Car Loan NOC

The car loan NOC process starts after the final EMI or foreclosure amount has been paid. The loan account must also be closed. Before waiting for the NOC, confirm that the payment has been credited. Also check that no outstanding dues or charges remain.

After closure of an existing auto loan, the NOC is dispatched within 5 working days to the registered address. If you need another delivery location, contact customer care or visit a branch.

Follow these steps:

1. Finish the Repayment: Pay the final EMI or the foreclosure amount due.
2. Check the Loan Status: Make sure no amount is pending and the account is closed.
3. Collect the Closure Papers: Get the NOC and the documents issued after the loan closes.
4. Verify the Details: Check the borrower name, loan account information and vehicle details.
5. Follow Up if Needed: Contact customer care if the NOC does not arrive within the stated timeline.

Once you receive the NOC, the lender-side closure process is complete. However, the hypothecation entry on the RC still needs removal.

Also Read – What are the Tax Benefits of a Car Loan?

The Crucial Next Step: Remove Hypothecation From Your RC

Important: Receiving the NOC does not itself change the RC. If hypothecation remains, the financier still appears in the vehicle-registration record. This can add another step when the vehicle is later sold or transferred.

The next step involves hypothecation. The borrower must apply for Hypothecation Termination with the registering authority. A car loan hypothecation entry remains until this process is completed.

Where the service is enabled, the VAHAN process generally involves:

1. Log in to VAHAN Vehicle Related Services.
2. Enter the vehicle registration number and requested chassis details.
3. Submit the OTP sent to the registered mobile number.
4. Select Hypothecation Termination.
5. Enter the requested transaction and insurance details.
6. Submit the NOC, Form 35, RC and other required documents.
7. Review the applicable fee shown and complete the payment.
8. Complete any appointment, document submission or RTO visit required.
9. Track the application until hypothecation termination appears in the vehicle-registration record or updated RC.

Form 35 records termination of the agreement between the registered owner and financier. The RC and valid insurance certificate are also required. Depending on the state, proof of address, PUC and PAN/Form 60 or 61 may also be needed. The financier’s NOC may also be required.

The process can vary by state and RTO. Original documents or a physical visit may be required in certain cases. Where VAHAN supports hypothecation termination, more of the process may be completed online. Appointment and faceless-service options can vary as well.

Hence, after receiving a NOC for car loan, check the requirements shown for the vehicle’s registering authority before filing.

Documents and Fees You’ll Need

For hypothecation termination, the required documents can include the following. Note that some items may vary by state.

• Form 35 in duplicate, completed and signed by the registered owner and financier
• Registration Certificate (RC); original where required by the RTO
• Valid motor insurance certificate
• Car loan NOC or due-clearance certificate from the financier, where required
• Proof of address, where required
• Pollution Under Control (PUC) certificate, where required
• PAN copy or Form 60/Form 61, where applicable
• Chassis and engine pencil print, where required
• Signature identification of the owner, where required

For online applications, upload clear and legible scans of the required documents. Make sure the complete document is visible. Names, registration details, signatures, stamps and other information should also be easy to read. Blurred, cropped, dark or incomplete scans may make verification difficult.

If an RTO requires physical submission, check whether original documents must also be presented with the application.

Once the documents are ready, the application can move to the registering authority for processing.

Also Read – What is a Zero Down Payment Car Loan?

Why Removing Hypothecation Matters

Loan closure and hypothecation removal affect two separate records. The first closes your loan account with the lender. The second removes the financier’s name from the RC.

If hypothecation still appears on the RC, you may need the financier’s consent or extra documents. Other RC-related transactions may also involve additional steps, depending on the state and RTO process.

If you are considering refinancing or borrowing further against the vehicle, review the applicable eligibility and documentation requirements. You can also check the terms for a car loan top-up.

The car loan NOC supports the application to terminate the financier’s hypothecation. Form 35 and other required documents are also submitted. Once processed, the financier’s hypothecation is removed from the vehicle-registration record.

Conclusion

Closing the loan settles the credit account. The RC, however, still needs to be updated separately. After closure, keep the NOC, car loan closure letter or other closure document ready, along with Form 35 where required. Then complete the applicable VAHAN/Parivahan or RTO process to remove the hypothecation entry.

If the NOC needs another delivery location, use the available customer-service or branch channel. For help requesting or receiving your NOC after closure, use the available Tata Capital customer support channels.

Disclaimer: This article is for general information only. RTO procedures, document requirements, fees and online services can vary by state. These requirements may also change. Check the current VAHAN/Parivahan and state-RTO requirements before submitting an application.