Dubai: The Roads and Transport Authority (RTA) has launched an online system for vehicle mortgage release, a senior official told Gulf News.

RTA has set up a link with 89 banks, financial firms and corporate houses that allows them to update the mortgage release online.

“We have set up a system which allows banks, financial firms as well as big companies who offer loans to their staffs to release mortgage online, following which RTA sends an SMS and an email to the concerned motorists confirming clearance of their mortgage,” said Mohammad Abdul Karim, Director of Vehicles at RTA’s Licensing Agency.

He assured customers that the email or SMS they receive from RTA can work as proof of their mortgage release.

He added: “Earlier, customers had to approach banks multiple times to get the clearance of loan certificate, but with the new system, banks update RTA automatically once all the outstanding dues are cleared by the customer.”

The system also works for those motorists who apply to the bank for temporary release of mortgage in order to driver the car out of the country.

“The banks don’t issue any mortgage release certificates now. They update the system and RTA sends a notification to the applicants,” Abdul Karim said.

He also explained that in the next stage of the project, which will be ready by the end of this year, all applications related to vehicles, including mortgage release applications by customers, will be moved online.

“We want to minimise the paperwork and make things as easy and simple for people as possible and we are providing this service free of cost,” he said.

This paperless transaction, however, applies only to car registration in Dubai. Motorists can still opt to apply for their own clearance letters or no-liability letters at their banks for record purposes and for their own protection.

A clearance letter proving that you have finished paying your loan can be requested from your bank free of charge and is usually issued within two to five working days. A no-liability letter can be requested if a customer has cleared all dues with the bank. Charges between Dh50 and Dh100 usually apply.

Atty Barney Almazar, a licensed UAE legal consultant and partner at Gulf Law, said many residents are not aware of the importance of securing these documents.

“Car registration is not the sole purpose for getting a release or clearance letter. It is wise to request it from the bank for your own record for future use,” Almazar told Gulf News.

“It is your precaution because you’ll never know what could happen. Each time you finish paying off a loan, a credit card, or anything else, as long as it’s a financial obligation, get a clearance in black and white.”

Almazar said having clearance letters in hand, especially when leaving the country for good, helps deter potential problems at immigration ports.

He also stressed that those who had issued blank cheques to the bank for their car loan must insist on retriving the cheques or have them destroyed or disposed of in their presence.