Gangtok, July 21 -- The used vehicle market in India is booming, and a large share of cars and two-wheelers on sale today are still under an active bank loan. Buying such a vehicle is completely legal, but it comes with one critical catch that many first-time buyers discover too late: hypothecation. In this article, we will discuss the key things you need to check and verify before buying vehicle under loan.

What Is Hypothecation And Why It Matters

When a vehicle is purchased on a loan, the financing bank or NBFC records its name on the Registration Certificate (RC) as the hypothecated party. In simple terms, the seller may be the registered owner, but the lender holds a legal charge over the vehicle until the loan is fully repaid. Unti...