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How Much You Can Save By Scrapping Your Old Car And Buying A New One

  • Author :
  • TATA AIG Team
  • Published on :
  • 04/10/2023

Saving the environment is a top priority globally. But, unfortunately, old and unfit vehicles on the roads are significant contributors to environmental pollution.

To address the concern, the Indian government launched the Vehicle Scrappage Policy in 2021. The policy focuses on eliminating old and unfit vehicles from the roads.

If you have questions like how much money do you get for scrapping a car or how to scrap an old car for the money, read further to know the answers.

What is the Vehicle Scrappage Policy in India?

Before understanding how to scrap a car for the most money, it is necessary to understand the highlights of the Vehicle Scrappage Policy.

The Vehicle Scrappage Policy is a government-funded plan to remove unfit and old vehicles from the road and replace them with new and environment-friendly ones.

Starting April 1, 2023, only Automated Testing Stations (ATSs) conduct the fitness testing of Heavy Commercial Vehicles (HCVs). The same shall be applicable for other Commercial Vehicles (CVs) and Private Vehicles (PVs) starting June 1, 2024.

Commercial vehicles older than 15 years and private vehicles older than 20 years will be scrapped if they do not pass the fitness test.

The main objectives of the policy are:

  • Reduce pollution by scrapping unfit vehicles.

  • Enhance vehicle, passenger, and road safety.

  • Formalise the vehicle scrappage industry.

  • Generate employment in the automobile industry.

  • Improve the fuel efficiency and reduce the maintenance cost of a vehicle.

  • Make low-cost raw materials available for the automobile, steel, and electronic industries.

Incentives for Vehicle Owners on Scrapping Old Vehicles and Buying New Ones

If you are wondering how much do you get scrapping a car, here is the list of discounts and incentives you can get:

Old Car Scrap Value Discount: The scrap value of the vehicle, which is around 4-6% of the ex-showroom price of a new vehicle, is given as a discount to the vehicle owner.

No registration charges: You can show the scrapping certificate to get a waiver on the new vehicle’s registration fee.

Discount on new vehicles: The government has requested the vehicle manufacturers to provide a 5% discount to customers on presenting the scrapping certificate. This discount is in addition to the scrap value discount.

Concession on road tax: You may get a concession on the road tax for your new vehicle from the state government. This concession can be up to 25% for private vehicles and up to 15% for commercial vehicles.

Why Continuing With an Old Vehicle Can be Disadvantageous?

  • If you own a commercial vehicle that is more than 15 years old, you will have to pay a higher fee for its fitness test. Additionally, the charges for the fitness certificate will also be higher.

  • If you own a private vehicle that is more than 15 years old, you will have to pay a higher fee for the renewal of its registration.

  • You will also have to pay an additional green cess of 10-15% above the road tax for an old vehicle.

When Should an Old Car be Scrapped?

Old and unfit vehicles that emit a lot of pollutants contribute highly to the country’s carbon footprint. Therefore, to formalise the scrapping of such vehicles, the Vehicle Scrappage Policy lays down the eligibility conditions for scrapping of old vehicles:

Commercial and non-commercial vehicles undergo a fitness test to renew their registration.

  • If the vehicle fails the fitness test, the owner can get it fixed and re-appear for the test.

  • If the vehicle does not pass the fitness test, it is declared an End-of-Life Vehicle (ELV) and can be scrapped.

Where Should You Get Your Vehicle Scrapped?

If you have to get your vehicle’s registration renewed, consider the following:

  • If you plan to retain the vehicle, visit an authorised Automated Testing Station.

  • If you want the vehicle to be scrapped, visit an authorised scrapping centre.

How to Scrap an Old Car for Money in India?

Step 1: Contact the Authorised Scrapping Centre

  • To start the car scrapping process, call the authorised scrapping centre or contact them through their official website.

  • Once you have fixed an appointment, drive your vehicle to the centre or get it towed. You may have to pay the towing charges if you get your vehicle picked up from home.

Step 2: Submit the Documents

  • You must submit the following documents to get your vehicle scrapped:

  • Copy of vehicle owner’s PAN (Permanent Account Number).

  • Original vehicle Registration Certificate (RC).

  • Cancelled cheque.

  • ELV certificate provided by the Automated Testing Station.

  • In case the vehicle owner fails to submit the vehicle at the ATS, a letter of authorisation on the stamp paper from the authorised person must be provided.

  • Address proof of the vehicle owner.

  • Identity proof of the authorised person.

  • Digital photograph of the vehicle owner or the authorised person.

  • Vehicle owner’s undertaking that the information provided by him is true and correct to the best of their knowledge.

Step 3: Starting the Actual Scrapping Process

  • The first step is removing the tyres and battery. If the vehicle has a CNG kit, it is also removed.

  • The refrigerant from the air-conditioning unit is drained and forwarded to the de-pollution unit.

  • The engine oil, gearbox oil, steering oil, brake fluid, engine coolant and all other liquids are drained.

  • The exhaust system and the fuel tank are removed.

  • After removing the liquids, the recycling expert removes the doors, headlights, bumpers, bonnet, fenders, body panels, etc., manually from the vehicle.

  • Once the exterior components are removed, the recycler removes the interior components, such as the steering wheel, floor mats, dashboard, seats, and wiring system.

  • Finally, the brakes, engine, and suspension are removed, and the Vehicle Identification Number plate is discarded.

Step 4: Recycling and Reusing the Remaining Part of the Vehicle

  • Once all the other parts are removed from the vehicle, the remaining shell is dropped into a crushing unit and converted into a steel bale that is sold for smelting.

  • The parts removed earlier are sold or scrapped into a steel bale.

  • While the car is being scrapped, utmost care is taken that none of the fluids, gases, or other components contaminates the air or land.

Step 5: Issuing the Scrapping Certificate

  • You will get the ‘Certificate of Destruction’ once your vehicle is scrapped.

  • Present this certificate to the RTO authorities to get your vehicle deregistered.

  • You will get the scrap value through a cheque or digitally.

  • You can also use this certificate to get discounts on the purchase of the new vehicle, as discussed earlier.

RTO Rules for Scrapping an Old Car

  • You must write a letter to the RTO office about scrapping the vehicle.

  • You must submit an affidavit stating that the vehicle was not involved in the act of theft. Additionally, you must also declare that there are no bank loans, insurance claims, traffic penalties, or court cases against the vehicle.

  • You must also submit the vehicle’s original documents and the number plate that was cut out from the vehicle during the scrapping process.

  • The scrapping centre must provide you with a confirmation letter on their letterhead and photographs of the scrapped vehicle to submit at the RTO office.

  • If all the above documents are satisfactory, the RTO authorities will deregister your vehicle.

How Does Scrapping Your Vehicle Affect its Car Insurance

As seen above, a vehicle’s registration certificate is cancelled when it is scrapped. Additionally, you must inform your four-wheeler insurance provider about its scrapping.

When a vehicle gets deregistered, its car insurance policy is also cancelled by the insurer. Cancellation of the registration number and four-wheeler insurance plan prevents misuse of pre-existing vehicle information.

Here is how cancelling a car insurance policy for a scrapped vehicle affects you:

Once your four-wheeler insurance policy is cancelled, you need not pay the policy premiums anymore.

  • If the insurer has to pay you a refund for premiums paid before the scrapping, it is calculated on a pro-rata basis.

  • If you have raised a claim against your car insurance policy in the present year before the vehicle is scrapped, the policy will not be cancelled in the existing year. The insurance plan can be cancelled only next year in this case.

  • If you have not filed a claim on your car’s existing car insurance policy, you can get the No Claim Bonus (NCB) transferred to the new car you buy. It is because the No Claim Bonus is awarded to the policyholder and not the vehicle. Therefore, you can get an NCB certificate for the existing car and get a discount on your new four-wheeler insurance policy.

Moreover, when you buy a new car, you need to purchase a fresh four-wheeler insurance policy for the new vehicle. With Tata AIG, you can buy car insurance online and save time and energy on visiting the branch physically.

Additionally, you can compare car insurance online to choose the plan with the maximum coverage for a reasonable premium for your new vehicle.


Scrapping old vehicles has a positive impact on the environment. It also saves you from the higher fees payable for the fitness test and registration certificate of an old vehicle.

Additionally, you can benefit from the discounts you get on the purchase of a new vehicle by presenting the scragging certificate for the old one.

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Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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