Ujjawal Pahwa Shares Important Steps After Paying Off Your Car Loan

Did you know that paying off your car loan doesn't automatically make you the official owner? In India, where 80% of cars are financed, many owners are unaware of the steps needed after the final EMI to gain full ownership. Ujjawal Pahwa, a popular finance influencer and digital creator, shares his insights on the process of removing hypothecation from your Registration Certificate (RC). Here's what every car owner should know.

1. Understanding Hypothecation on Your RC

When you finance a car, your name appears on the Registration Certificate (RC), but it includes a note endorsing the vehicle in favor of the bank. Essentially, the bank is the official owner until the loan is paid off. Even your car insurance policy prioritizes the bank's interests until the hypothecation is removed. However, you're free to use the car as you like, whether for personal or business purposes.

2. Why Removing Hypothecation Is Necessary

Once you've paid off your loan, it's important to remove the hypothecation from the RC to ensure complete ownership. Without this, the bank may still be the beneficiary in case of any insurance claims, potentially affecting compensation if the car faces total loss. By updating your RC, you take full control of your asset.

3. Required Documents for Hypothecation Removal

To remove hypothecation, you'll need to provide the RTO with the following documents:

• Form 35 (for hypothecation removal)
• NOC from the Bank confirming loan closure
• Current RC
• Aadhar Card and PAN Card
• Copy of Car Insurance
• PUC Certificate

These documents collectively verify your identity, confirm loan closure, and help complete the RC update.

4. How to Remove Hypothecation from Your RC

Begin by filling out Form 35 and submitting it along with the above documents to your local RTO. After verification, the RTO will issue a new RC without the hypothecation note within a few days. This step is crucial to finalize your ownership of the car.

5. Notify Your Insurance Company with the Updated RC

Once you receive the updated RC, don't forget to inform your insurance provider. Failure to submit the new RC could result in the bank being considered the primary beneficiary, which may impact your claim settlement in case of total loss. Ensuring the insurance company has the updated RC safeguards your interests.

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Ujjawal Pahwa's advice serves as a reminder to complete the hypothecation removal process after paying off a car loan. By following these steps, you can secure full ownership and avoid potential issues with insurance claims. Taking these actions after your last EMI is essential for car owners who want to protect their investment.