Can I get a loan for a car that’s already under hypothecation?

You’ll often see this with second-hand cars: the seller has a loan running, and the RC still shows the finance company’s name. On paper, the car is not fully theirs yet. In such a situation, a fresh loan in your name usually doesn’t start immediately.

Most lenders want the previous loan closed before they proceed with the new loan. Two finance companies can’t treat the same vehicle as security. So they first look at who is shown on the RC and which lender is marked there.

This is what normally has to happen before your loan:

• The seller clears their pending car loan.
• Their lender issues a No Objection Certificate (NOC) after the last payment.
• The seller takes this NOC, along with Form 35 and other papers, to the RTO and asks for the hypothecation to be removed from the RC.

As a buyer, you can quietly check each step: see the NOC, ask for a copy of the RTO receipt, and keep a photo of the updated RC once it’s ready.

Once the paperwork catches up with the reality of the sale, the loan process also tends to move seamlessly.