HP Cancellation in Vehicle RC – Step-by-Step Guide After Loan Closure

What is HP Cancellation in RC?

When you buy a car or bike through a loan, your RC (Registration Certificate) shows HP (Hypothecation), which means the vehicle is financed by a bank or NBFC.

After the loan is fully repaid, you must remove HP from RC by applying for hypothecation cancellation at your RTO (or through the Parivahan online portal). Without HP cancellation, the vehicle will still be considered financed, which can affect ownership transfers and insurance claims.

📄 Documents Required for Hypothecation Cancellation

To apply for RC hypothecation removal, you need the following documents:

• NOC (No Objection Certificate) from the bank/finance company
• Form 35 (in duplicate, signed by bank + owner)
• Original RC (Registration Certificate)
• Valid Insurance Certificate
• Valid PUC (Pollution Under Control) Certificate
• ID proof (Aadhaar / PAN / Driving License)
• Applicable RTO Fees Receipt

🛠 Steps for HP Cancellation in RC

1. Collect NOC and Form 35 from the Bank
2. After closing your loan, request your lender to issue the NOC and Form 35. These documents confirm loan repayment and are essential for HP cancellation.
3. Apply Online (Parivahan) or Visit RTO

• Online Process: Go to the Parivahan portal or your local RTO office.
• Select the Hypothecation Termination (HP Removal) service.

1. Submit Documents & Pay Fees

• Upload/submit documents like NOC, Form 35, RC, insurance, and others.
• Pay HP cancellation fee (₹200–₹500 depending on state).

1. Verification Process

• The RTO will verify the documents with the lender.
• Some RTOs may require a physical vehicle inspection.

1. Updated RC Issued
2. Once approved, you’ll receive a new RC without hypothecation (either digital via Digilocker/Parivahan or physical copy).

🕒 How Long Does HP Cancellation Take?

• Processing time: 7–14 working days
• Online applications (Parivahan) are generally processed faster than offline.

❌ Why is Hypothecation Removal Important?

If you don’t cancel HP after loan repayment:

• Selling your vehicle: You cannot transfer ownership or sell your car/bike easily.
• Loan-financed status: The vehicle will still show as financed.
• Insurance issues: Insurance claims may face difficulties.
• Incomplete ownership: Legal ownership remains incomplete.

Frequently Asked Questions HP Cancellation in Vehicle RC

1. Can I do HP cancellation online?
2. Yes, you can apply for hypothecation termination online via the Parivahan portal in most states. It’s a quick and convenient option to update your RC digitally.
3. How much is the HP cancellation fee?
4. The fee for HP cancellation is usually ₹200–₹500, depending on the state RTO.
5. What if my NOC expires?
6. Bank-issued NOC is valid for 90 days. If it expires, you need to request a fresh NOC from your lender.
7. Do I need to visit the RTO physically?
8. In some states, yes – especially if the RTO requires a vehicle inspection. In other states, online approval and Digilocker RC update might be sufficient.
9. Can I sell my vehicle without HP cancellation?
10. No. Buyers won’t be able to transfer the RC or register the vehicle unless hypothecation is removed.