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Form 35: How to Remove Hypothecation from RC After Loan Closure
Form 35 is the application for termination of hypothecation under the Central Motor Vehicles Rules, 1989 [Rule 61(1)]. When a vehicle loan is fully repaid, the bank's name stays on the RC until the owner formally applies to remove it. That application is Form 35.
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What hypothecation means on an RC
When you finance a vehicle, the lender registers a lien called hypothecation on the RC. This shows the bank has a financial interest in the vehicle. While hypothecation stands, the vehicle owner cannot:
- Transfer or sell the vehicle without the bank's consent
- Re-register the vehicle in a new state
- Get an NOC from the RTO for interstate transfer
Once the loan is fully paid, the bank issues a No Dues Certificate (NDC) or a No Objection Certificate. You then use Form 35 to ask the RTO to remove the hypothecation entry from the RC.
Documents required for Form 35
- Form 35, filled and signed by both the owner and the financer
- Original RC book
- Bank's No Dues Certificate or NOC on letterhead
- Form 29 (notice of transfer) if you are selling the vehicle at the same time
- Valid insurance and PUC certificate
- Owner's address proof and ID proof
- Applicable RTO fees
How to remove hypothecation from RC after loan closure, step by step
Whether the loan was for a car or a two wheeler, the removal process (sometimes called HP cancellation or hypothecation cancellation) is the same:
- Repay the loan in full and collect the NDC or NOC from the bank.
- Ask the bank to co-sign Form 35 (the financer's signature is mandatory).
- Collect the original RC book, insurance, and PUC from the vehicle file.
- Submit Form 35 and all supporting documents at the RTO where the vehicle is registered.
- Pay the prescribed fees (varies by state, typically Rs 300 to Rs 500).
- Collect the updated RC with hypothecation removed, or wait for it to arrive by post.
Selling a vehicle after hypothecation removal
If you are a dealer buying a used car that still has hypothecation on the RC, ensure the seller completes Form 35 and gets the RC updated before you resell it. A buyer taking delivery of a hypothecated vehicle faces complications in transfer and insurance, and the buyer's RTO will not process Form 30 cleanly.
Form 35 and Form 34 at a glance
| Form | Purpose |
|---|---|
| Form 34 | Add hypothecation when buyer takes a new loan |
| Form 35 | Remove hypothecation after loan is cleared |
| Form 28 | No Objection Certificate for interstate transfer or existing loan cases |
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Try Bill My Car free →Frequently asked questions
What is the hypothecation cancellation form called?
Form 35, prescribed under rule 61(1) of the Central Motor Vehicles Rules, 1989. Banks sometimes call the process HP cancellation or hypothecation termination; it is the same Form 35 filing at the RTO, submitted with the bank's NOC.
What documents are required for removing hypothecation from the RC?
Form 35 signed by both the owner and the financier (usually two copies), the bank's NOC/loan closure letter, the original RC, valid insurance, PUC certificate, the owner's ID and address proof, and the prescribed RTO fee. The bank NOC is typically valid for 90 days, so file promptly.
What is hypothecation on an RC?
Hypothecation on an RC means the vehicle is pledged as security for a loan. The bank or financer's name appears on the RC. The owner cannot transfer or re-register the vehicle without the bank's no-objection.
How long does hypothecation removal take at the RTO?
After you submit Form 35 with all supporting documents, most RTOs process hypothecation termination within 7 to 30 working days. The timeline varies by state and RTO workload.
Can I sell a car with hypothecation still on the RC?
Technically you cannot cleanly transfer ownership while hypothecation stands. The buyer needs a clear RC. You must obtain the bank NOC, file Form 35, and wait for the RTO to update the RC before selling.