Tips on How To Sell A Financed Car - All About Buying & Selling of Used Cars, New Car Launches
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Tips on How To Sell A Financed Car

Team CARS24
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These days buying a car has become very easy. Think of the car you want to buy, decide the color and fill out some forms! Voila! You have a brand new swanky car! Thanks to the various options available to get four-wheeler loans, people nowadays are able to afford even premium cars. However, nowadays people don’t keep a car in their garage for more than three years and hence, people look for an option to sell a financed car. Although it is easy to buy a car on loan but when they plan to sell it, it becomes cumbersome. Why? Because it is a lengthy and time taking process and not just that, it also involves a lot of paperwork.

Selling a financed car

To start with, selling a financed car majorly involves two steps:

  1. The first being, you need to clear the loan with the bank and get the NOC along with two copies of Form 35.
  2. Secondly, once you receive the NOC and Form 35 then you need to fill and submit all the other documents to sell the car.

When you purchase a car on loan, your car’s RC contains “HP”. HP stands for hypothecation which signifies that your car’s ownership lies with the bank. However, a lot of people don’t get HP removed from the RC even after clearing the car’s loan. In order to sell a car, you need to get the hypothecation (HP) removed from the RC.

Here are the steps to get the hypothecation removed from your RC if you still have a running loan on your car :

1. Visit your loan bank

In both the cases – where the loan amount is pending or has been cleared, you need to get the HP removed from the RC in order to sell a financed car. To do that, visit your loan bank to get the loan foreclosure documents which specify the pending loan amount on your car.

2. Clear the dues to get NOC and Form 35

Clear the dues as per the loan foreclosure documents and you will receive the NOC along with two copies of Form 35 which is usually sent to your registered address. However, if you wish to procure the documents yourself, you can do that by visiting the bank.

Selling a financed car

3. Submit other sale-related documents

After receiving the NOC and Form 35, collect all the other documents that are required to sell car and submit them to the RTO to complete the process.

Now, before we move ahead. Here’s a quick preview of the documents that are needed to sell car:

Documents Required To Sell Car In India

That being said, the three-step process mentioned above might look easy, however, it is far from being that. Why? Read on to know more about it.

1. Each bank has a specific time limit for issuing the NOC. Normally, the NOC is sent to the registered address but you can also approach the bank to procure it.

Here is the NOC issuing time list for some banks:

Bank Name Expected Time For NOC

(Working Days)

HDFC BANK 15
ICICI BANK 15
KOTAK MAHINDRA BANK 15
SUNDRAM FINANCE 20– 25
INDUS IND 30
SBI 3 – 5

2. If by chance you end up misplacing your NOC, the banks charge an approximate amount to issue a duplicate one which again would take its own sweet time to be delivered at your address.

Here is the list of some banks with their charges for issuing a duplicate NOC:

Bank Name Fee (In INR)
HDFC BANK 500
ICICI BANK 575
KOTAK MAHINDRA BANK 750
SUNDRAM FINANCE 500
SBI 300

3. Even after you receive the NOC and Form 35, you need to wait for another two weeks. Why? Because that is the ideal time the RTO would take to clear the “HP” from your RC and transfer it in the name of the buyer.

“However, the bank may not provide NOC to you if there is any linked loan on the car or any outstanding balance on the car”

The above-mentioned steps are valid in the scenario if you do have money to clear the dues with the bank. Now, let’s have a look at three more scenarios through which you can sell your financed car.

Scenario 1: If you don’t have money to clear the loan on your car and don’t have a buyer for your car

The first scenario is when you are unable to pay the pending loan on the car and you have no other way to sell it. What to do in that case? Well, you can talk to the financier/ bank to cease your car. In that case, the financier/ bank conducts an auction on your car to sell it. However, you might face these issues through this way:

  • Firstly, since the car is auctioned through the bank, it might be done for a lower value and you might not be able to earn any extra bucks on it and it would just settle your loan.
  • Secondly, it might even go for a lower value than your pending loan amount wherein you will have to pay the remaining amount to clear the loan with the bank.

Scenario 2: If you don’t have money to clear the loan on your car but do have a buyer for your car

You can also try to find a new buyer for the car who is willing to pay your pending dues with the bank and then you can sell and transfer your car. However,  through this way too you might end up in a dilemma. How? Here’s how!

  • The new buyer might ask for a heavy discount considering that your car is still on loan which might not be helpful to you as it can lower your chances of earning a profit by selling your car.
  • Secondly, while selling a financed car to the buyer, the biggest problem is that it would be very time-consuming. Not only the bank would take up to two weeks to issue an NOC but even the removal of HP from the RC would take another two weeks. Are you really willing to waste almost a month to transfer your car?

Are you already facing such a scenario? Are you planning to sell a financed car but don’t want be stuck in a never-ending time loop? Well, we have the perfect solution for you! CARS24 – sell your financed car at the best price. Along with that, we will even help you in procuring various other forms which are needed to sell your financed car. You can leave all the hassles to us as you will also get free RC transfer. Don’t waste any more time! Sell your car to CARS24 for the guaranteed best price now!

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