Often, we complete paying our auto loan or car loan, and think that we have completed our job. This is not the case though.
Here are things you should do and documents you should collect as soon as you finish paying your last installment. Remember, even if you do not, your vehicle would still be in the name of the bank or the financial institution. Here are a few documents you must collect and the processes you must follow.
One of the most important documents to collect is the No Objection Certificate or NOC. Most probably, you will get this only after your final cheque is cleared. It is likely that the bank or the institution will give you the NOC after 1-week from the date of clearance. You can even approach the bank a little earlier. The bank may or may not send the NOC through courier.
2) Take the NOC and meet the insurance company
Inform the insurance company that the loan is complete, so they make appropriate changes in the insurance policy.
3) Take the NOC and go to the RTO
You should go to the RTO, after receiving your NOC. Remember, the car is still hypothecated and you cannot sell it, unless the name of the bank is removed from the registration. Once the bank gives you the NOC, the RTO will have no problems in re-registering the same.
It will send you a registration in a few days, with just your name on the vehicle.
The complications in not changing the registration quickly
Let's say that you pay the final EMI, technically the car should only be in your name. Now, let us say that you delay the removal of the bank's name. In the meantime, if your car is stolen, the insurance company has to make good the IDV of the car.
Now, the question is: in whose name does the insurance company make good the payment?
Logically, the bank or the institution should not get part of the insurance payment, since you have paid your last installment. On the other hand the bank's name is still on the registration book.
That is why you will have to fight your battle with the bank and the insurance company.
Once again we wish to remind readers that complete the formalities at the very earliest and get the registration done in your name quickly, once the loan has been completed.