Home Cars How to Sell a Financed Car in 2020?

How to Sell a Financed Car in 2020?

sell a financed car

The latest models and convenient finance schemes offered by banks tempt many owners to sell their old car and purchase a new one. The selling of old car that had been purchased with a loan from the bank must have certain clearances before selling it. The Registration Certificate (RC) of the car will have a seal indicating that the car has been “hypothecated to” the bank. It makes the bank the owner of your car in the documents held with the registering authority unless you remove it officially.

The initial step for removal of hypothecation is to submit a request to the bank for No Objection Certificate (NOC) and Form 35. The bank may take around 3-14 working days for the provision of NOC. The time taken for issuance of the certificate differs from bank to bank.

The total process for removal of hypothecation and sale of the financed car may be long drawn and tiring. The buyer may not be any help to you throughout the process. Since it is the seller’s responsibility to conclude the official documentation and ownership transfer.

The steps for clearing hypothecation are enumerated in the following paragraphs.

 Approach the lender bank

You can submit the request along with requisite documents to the bank for issuing NOC. The bank will check the loan status and amount pending if any. The time taken for verification and issuing the No Objection Certificate along with 02 copies of Form 35, is approximately 03-14 working days. You can confirm the same from the bank.

The bank will send the certificates and Form 35 to your registered address. In case, you have changed the residence or wish to collect the certificate in person from the bank. You can intimate the bank regarding the same. They will inform you once the formalities have been completed and the NOC is ready.

Submit the documents to Registration Authority

The NOC and Form 35 from the bank have to be submitted to registering authority for removing the hypothecation from the Registration Certificate. The application for removing hypothecation has to be accompanied by copies of valid insurance certificate, Pollution Under Control (PUC) Certificate and other relevant documents directed by the authority.

The process may appear easy. However, it is easier said than done. The time for completing the formalities will depend on the bank and the officials at the RTO. The RTOs have stipulated days and time for acceptance of an application for removal of hypothecation.

You have to confirm the timing and day before you go. It may be noted that there will be frauds pretending to help you. They may charge you high commission for the process. You may avoid giving money to the brokers and try to complete the formality by yourself.

 The documents required for Selling your Used Car

Copy of Pan Card – A self-attested copy of PAN card

 Proof of Address – One self-attested copy. You can use copy of electricity bill, voters id card, license or Aadhar card as proof of residence.

 Two copies of self-attested photographs

In addition to the aforesaid, you will require documents and certificates from RTO too, for selling your financed car.

  • Three copies of Form 28 with Chassis number embossed
  • One copy of Form 35 (bank stamp compulsory_
  • Two copies of Form 29
  • Two copies of Form 30
  • NOC
  • Affidavit for sale of the used car
  • Sale clearance certificate

You can sell your financed car after obtaining the above-mentioned proper documents and forms. The basic documents related to the car including RC, PUC, Insurance are also required. You may have to give an application for transferring of insurance to the buyer. This depends on your agreement with the buyer.

The seller has to complete all the above formalities if you are selling your car to an individual. The time taken for completing the documentation and obtaining all the clearance certificates may vary depending upon the officials at RTO. It may take more time if a particular RTO is busier than other RTOs.

On the other hand, you cannot handover the vehicle without completing the transfer of ownership. It will be a risky affair. In case, the buyer uses it for any illegal acts or meets with an unfortunate incident, you will be held responsible if the owner has not been transferred.

The representatives of the used car dealer will undertake the paperwork mentioned above if you are selling your car to them. Then, you can relax unconcerned about the official formalities or genuineness of the buyer. As it is the responsibility of the used car showroom to ensure the individual, buying the car, is a genuine person.

The responsibility to ensure that your second-hand car gets the value it deserves depends on you. Individual buyer may negotiate for increasing the gains. He or she may even decrease the value, in case they find that you are in urgent need of money. It doesn’t matter whether you sell used cars in Kerala, Maharashtra, Delhi or any other place across the nation, tread carefully, and make a wise decision. Think and decide the best option for selling your old car.

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