Buying a car is almost everyone’s dream, many people fulfill this dream by taking a car loan. When your financial condition is better, if you are planning to repay your loan early then you can do so. This is called fore-closure in banking language. What things should be kept in mind while closing the car loan before time.
If you also want to close the car loan before time then you will need many important Car Loan Closure Documents. There is a different kind of happiness as soon as the car loan is paid. If you also want to pay the car loan before time, then you will have to go through many steps.
You Will Have To Apply First
Before closing the car loan, you will have to apply to the bank or finance company for foreclosure of the loan. Along with this, you will also have to attach a copy of your loan account number, PAN and address.
Check The Outstanding Amount
If you want to close the car loan, then for this, first the person has to contact the bank or institution to know the outstanding amount of the car loan. The loan amount includes the principal amount and several applicable pre-closure fees.
Know About Loan Foreclosure Charges
There is no pre-payment penalty for closing a floating rate loan on time. If you have taken a fixed rate loan, then some charge may be levied. These charges are not added to the foreclosure payment.
Pay The Outstanding Amount
After applying for loan closure on your behalf, the bank will calculate the remaining amount of the loan. In this, the interest and amount paid so far and the date of foreclosure will also be taken into account.
Take Back All The Relevant Documents From The Bank
The formalities of foreclosure are completed by the bank after receiving the outstanding amount. After this, your EMI is stopped. After the completion of all these processes, the original documents like property title deeds and related documents are returned to you in 10 to 15 days. If there is a delay in returning it from the bank, then you will have to talk to the concerned officer.
Car Loan Closure Documents
- Car registration proof.
- Insurance certificate.
- PAN card.
- Bank statement to show last installment paid.
Get A No-Dues Certificate From The Bank
After closing the car loan before time, you must get a no-dues certificate (Car Loan NOC) from the bank. This certificate must mention that you have no outstanding dues. This certificate must include the property address and the name of the customer.
Remove Hypothecation From RC Book
After paying the car loan, it is necessary to remove the hypothecation from the car registration. To remove the hypothecation, you have to go to the Regional Transport Office.
Note: When you close a car loan before time, you have to go through many steps. Therefore, it is common to make some mistakes. To avoid these mistakes, read the information given below carefully.
- The NOC received from the bank is valid for a period of 90 days, so it has to be submitted to the RTO and the insurance company before its validity expires.
- You have to take care whether the paperwork is filed with the RTO correctly or not because if you fail to submit even one of the required documents, then the RTO will not remove the mortgage from the car.
- After submitting the required documents to the RTO and the insurance company, do not forget to take an acknowledgement receipt.
Benefits of Car Loan Pre-closure
When you close a car loan before time, you get many benefits which are explained in detail below.
- You do not have to pay EMI every month.
- You do not have to pay interest every month.
- You will have full rights over your car as soon as you pay for it.
- You will get relief from debt.
Conclusion
After closing the car loan, you must check the document checklist to ensure that all the documents have been returned in good condition. You must then inform the credit rating agencies about the foreclosure so that they can update it in their records. If you have any question regarding this post, then you can tell us by commenting in the comment box given below. Your feedback and suggestions are welcome as always. Thank you.
