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Paid the last EMI on your car loan? Know the five things you need to do right after

Do collect the entire repayment statement of your car loan from the bank. This will be useful while updating the credit history in case of any discrepancies in your credit score and the report.


A number of borrowers believe their job is done after paying the last equated monthly installment (EMI) on their car loan. But, it still an unfinished task for the borrower.

After completing the repayment of your car loan, there are five important things that you need to do as we explain below:

1. Take final payment receipt

If you made the last EMI on your car loan or did a prepayment to close the car loan, then get the final payment receipt from your bank. This receipt will have the details of total amount paid, the date of last payment and the closure of the car loan.

2. Take a No Objection Certificate

Within 2-3 weeks’ time of repaying the car loan, you should receive all your documents from the bank. The set of documents include a No Due Certificate (NDC) or No Objection Certificate (NOC) from the bank along with other documents submitted at the time of the car loan application. In case, you don’t receive from the bank then better to enquire after its status.

3. Get your repayment statement

Do collect the entire repayment statement of your car loan from the bank. This will be useful while updating the credit history in case of any discrepancies in your credit score and the report. Also, this statement will help to resolve future conflicts if any while selling the car, claiming insurance, etc.

4. Remove hypothecation

Hypothecation essentially means that your car for which you have taken a loan for is kept as collateral with the bank till you pay off your loan. The car is in the physical possession of the customer but the bank is the actual owner of the car till the customer pays off the entire loan amount.

Kusal Roy, Managing Director at Tata Capital Financial Services says, “It is important to remove the hypothecation because it helps at the time of claiming insurance and till the hypothecation is removed you cannot sell or dispose the vehicle.”

To remove hypothecation, NOC from the bank is required. Submit the NOC to the regional transport office (RTO). Roy cautions, “The NOC from the bank is valid for three months from the date of its issue. So, do not delay in submitting the application for hypothecation removal from the car registration certificate at your respective RTO office before NOC expiration.” Only after the NOC is submitted to the RTO, for removal of the hypothecation, will you be able to transfer the car in your name.

Also, request for form 35, which will state the removal of hypothecation between you and the bank.

5. Update your car insurance policy

Hypothecation information is even recorded by car insurance company on your car insurance policy. So, you need to remove it from your car insurance policy after complete repayment of car loan. For the removal of hypothecation from the insurance policy, submit the NOC and revised car registration certificate to the car insurance company.


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