What is hypothecation?
Hypothecation is a procedure of pledging property as a security for the repayment of a loan. In other words, it is a claim against the property as a security of a debt. In this, the borrower signs in a contract with the lender under certain conditions noticed by the lender. In case of vehicles, the vehicle itself which is purchased on a loan is the security of the loan. Moreover, neither ownership nor possession is transferred to the lender, but the borrower enjoys the ownership under certain agreement.
How to get hypothecation cancelled?
1. First of all repay your full loan amount. Then keep the receipt of your payment as a proof.
2. You will be given 2 forms of Form 35 from the lender(bank). Fill up both forms.
3. Buy a postal cover and paste 12 rupee stamp on it. Don't forget to write your name and address on it.
4. You need to pay Rs.100 as the procedure fee for HP cancellation. Now collect the receipt after payment.
5. Attach the original RC book, a copy of valid insurance and a further copy of valid pollution under control certificate along with the postal cover and submit to the RTO.
6. A receipt will be given from the RTO as a proof of your submission. Keep it safely.
7. You will get the RC book by speed post within a week.
NB: Before submitting original certificates, forms and receipts, it is better to keep at least a photocopy each for proof.