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A two wheeler loan can be closed easily without any tedious tasks to be done before closing. If you are willing to close your two wheeler loan, you just need to pay your outstanding balance amount, if there is any and also pay the charges for pre-closure of the loan.
- Loan closure at the end of tenure: Ending a two wheeler loan tenure means that you have reached the end of paying EMIs. After you have paid your last EMI, you will have to write to your loan provider mentioning that your loan tenure has come to an end.
- Loan Closure by Prepayment: It is required to pay the prepayment penalty if a loan is closed before the end of the loan tenure. Prepayment fee of the certain percentage is charged by the banks, usually on the principal outstanding or the amount you want to prepay. Get all the cancelled post-dated checks that you had issued to the bank/finance company when you took the loan.
How to Close a Two Wheeler Loan Through Creditseva
Ultimately, it can be understood that a two wheeler loan can be closed either after the entire tenure is completed or by prepayment of the loan amount. Prior to taking a decision, the borrower should make a detailed comparison of the different features of the different two wheeler loans offered by different institutions. In the process of doing this, a borrower needs the help of a credit advisory firm like Creditseva so that better decisions are made to and there is an improvement in their credit score.
Procedure to Follow for Closing a Two Wheeler Loan
- After the loan is closed, the bank will send you a mail with the NOC and the cheques that were given to you when the loan was taken. These cheques will have a stamp of “Cancelled” drafted on them.
- Subsequent to receiving the NOC, you need to put your signature on it and then submit it to the RTO where the two-wheeler had been registered while taking the loan. The RC book should also need to be kept safely along with the NOC.
Documents Required for Closing a Two Wheeler Loan
There are few important documents that are required while closing a two wheeler loan. Listed below is the list of all these important documents
- An Original NOC from the Bank
- A copy of PUC and Insurance
- A copy of your PAN Card
- A copy of your RC Book
- Original Form 35
Steps to be Followed After Closing the Two Wheeler Loan Account
- Firstly, it is required to gather the NOC from the bank.
- After the first step, you should visit the RTO where the two-wheeler has been registered. Then the de-hypothecation process begins.
- You will be given a form.
- The form given to you should be filled up, the NOC, RC should be attached to it. These all documents are together submitted for the cancellation of the hypothecation.
- After the execution of the above process, you need to gather the receipt of Acknowledgement for RC submission. A copy of the acknowledgment receipt should also be kept with you.
- Lastly, you need to go at the specified date and receive the RC that has been updated after the closing of the two wheeler loan.
Documents to be Collected After Closing a Two Wheeler Loan
- Get the NOC: The bank needs to provide you with an NOC. This means that the bank has no objection to remove the hypothecation. Note that the bank NOC is generally valid only for 3 months or 90 days. You must submit your application to the RTO, before the NOC’s expiration. It is a time taking the process to gather documents from the bank.
- Form 35: This will mention the termination of the hypothecation agreement between you and the bank.
- Cancellation of Hypothecation: You should get the hypothecation removed at the Regional Transport Office (RTO) where your two-wheeler has been registered.
- Get hypothecation removed from your insurance: A copy of the NOC and Form 35 should be submitted to the insurance company that covers your two wheeler insurance so that the hypothecation is removed from their records too.
Points to be Noted During the Process of a Closing a Two Wheeler Loan
There are few crucial things that have to be taken care of while closing a two wheeler loan.
In order to get the hypothecation removed the following steps are to be followed.
- You should keep 3 copies of NOC. One has to be with you, the second one should be given to the RTO and the 3rd copy has to be given to Insurance Company.
- It is required to remove the hypothecation from the insurance first and after that, an application should be made at the RTO. The updated insurance papers are also required.
- The next step is to get a confirmation by RTO and removal of the endorsement.
Terms and Conditions for Foreclosing a Two Wheeler Loan
- If you are willing to foreclose your two-wheeler loan within a span of 7 – 12 months from the 1st EMI, you will have to pay between 5-10% of the principal amount that is outstanding.
- If you are planning to foreclose your two-wheeler loan within a span of 13-24 months from 1st EMI, you will have to pay between 4- 8% of the principal amount that is outstanding.
- In case you are planning to foreclose your two-wheeler loan after 24 months from 1st EMI, you will have to pay 2-5% of the principal amount that is outstanding.
Two Wheeler Loan Closure FAQs:
1. When does the bank send you an email with the NOC?
You will receive an NOC through an email from the bank. Usually, the mail will be sent in a period of 20-30 days after you have made the last EMI payment.
2. What precautions have to be taken before the submission of Form 35?
You need to see to it that have definitely put your signature on Form 35 before its submission.
3. What needs to be done to receive another letter from the bank if there is a delay caused by me in following up with the formalities?
You need to call the bank from where you have taken the loan and ask them to issue a foreclosure letter. The amount that is outstanding, to be paid by you, will be specified on it.
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