What is procedure to exchange car within hypothecation period

If someone has bought new car and there is Car loan from bank for 5 years.Now if he sees another better car and want to exchange the existing car for another new model what is the procedure for it?

Is it possible to charge the difference amount to existing EMI by exchanging the car or 1st we have to find a buyer and then bring the money to pay the outstanding amount and then apply for new loan?

You have to foreclose the loan against a new loan, at newer terms for the new car.

If the bank is the same, it is probably easier, because the earlier loan reference is available, as is the credit history.

If you are exchanging the car, the registration of the car needs to be transferred to the dealer, and the hypothecation on it needs to be removed. This will go hand in hand with the registratration of the new car and its hypothecation to the bank. Let the bank officer work out the logistics for you.

If on the other hand you want to approach a newer bank for the loan, the earlier loan will have to be foreclosed outright, with the dealer paying out for the older car for whatever it is worth, and you paying /getting the difference, based on how much of the loan is repayed, and the final settlement turns out to be positive or negative. The proceeds if any can either be used for part payment of the new car or utilized otherwise.

Your process should start with asking a statement for the older car loan account, and stating your case while the bank official is at it. Then take it up from there. You will need the statement in both scenarios stated above.

Thanks Krishna for your feedback