If you’re looking to buy or sell a second-hand car, here are a few important things you need to keep in mind to make the entire process a risk and hassle-free affair.
Nothing compares to the thrill of driving a car for the first time, especially if it’s your own car. But, if you’re still a rookie, maybe you should put off spending a bomb on a new car until you’ve perfected your driving skills.
With less capital investment and affordance of luxury models, buying a used car can be a good investment decision. However, your used car could turn into a constant source of risk and worry if you ignore some important points. Let’s take a look.
Buyer’s checklist:
When you’ve made up your mind about purchasing a used car, here are some things that you need to keep in mind:
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Check the car’s condition
Even a used car needs to be in good working condition and be worth the amount you’re willing to pay.
Before you zero in on a model, take the car out for a test drive and get its parts checked by a trusted mechanic to see if all major systems like the engine, cooling, transmission, wheels etc are working fine and the car is in as good a condition as the seller claims.
Prior to the delivery of the vehicle, do a thorough check to see if any parts are missing or have been replaced/damaged since the time you first checked out the vehicle.
Additional reading: Your Guide To Buying A Second-hand Car
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Registration documents
It may be possible that you’re being lured into a fraudulent deal where you might end up paying more than your share of the bargain. This is why a thorough check on the paperwork before finalising the deal is imperative.
The checklist for paperwork is:
- Registration book: Issued by the RTO, it shows the date of registration of the car. The car’s engine number and the chassis number should be verified with the information in the RC book. If the car met with an accident that involved the changing of the car’s chassis, then the RC book should mention the new chassis number.
- Taxation book: This document shows the status of the tax paid. The RTO tax is paid once in a lifetime and should have been paid by the original car owner.
- Invoice: Remember to get the original invoice from the owner. The invoice contains the engine number, the chassis number, the date of delivery etc.
- PUC certificate: Every car needs a valid PUC certificate. A PUC Certificate is valid for a period of 1 year for all new cars and subsequently, a certificate has to be obtained every six months.
Additional reading: Why Buy A Second-hand Car
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Car insurance
Check the car’s insured value in the policy to use it as a benchmark during price negotiations. Also, check the number of claims bonuses in the past 2-3 years. Frequent claims may indicate frequent accidents requiring vehicle repair and maintenance.
Transfer the seller’s Car Insurance policy in your name or buy a new policy within 14 days of the date of transfer of the car. Failure to do so can lead to your claim being rejected in case of any accident or mishap. Only claims related to third parties get approved under the deemed insurance policy transfer of the law.
Documents required include:
– Proof of sale of the car
– Proof of delivery of car to your possession
– New RC book issued in your name
– Request from the seller for cancellation of policy
– Your application for transfer of the policy
Additional reading: Foreclosing Your Car Loan: Is It A Good Idea?
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Certified pre-owned vehicles
Opt for certified pre-owned vehicles when you’re buying a used car. These vehicles give buyers similar benefits as they would with new cars. You not only get the additional extended warranty, but also any remaining original manufacturer warranty as well.
Additional reading: Drama Lama’s Car Loan Dilemma
Seller’s checklist:
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Proportional premium
Add proportional premium paid on the insurance policy to the car’s purchase price. If you’ve paid the premium for one year and are selling the car after six months, you can ask the buyer to pay his share of the premium.
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Obtain an NCB
Obtain an NCB (No Claim Bonus) retention letter from the insurance company. The NCB can’t be transferred even if you’re transferring the policy. You can retain it and enjoy its benefits when buying a new Car Insurance policy.
You can cancel the insurance policy by submitting the following documents:
- Original policy letter
- Certificate of insurance i.e. Form 51
- Application for issue of a certificate of retention of the NCB.
If you’re selling your old car and buying a used car, then you must submit these additional documents:
- Form 29, which is the form for transfer of car’s ownership
- Form 30, which is the report of transfer of the car
- Copy of RC Book issued in new owner’s name
- Proof of delivery of your old car to the new owner
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Legal agreement
Back up all your discussions with the owner with the help of a legal agreement. Draw up a written contract that details the condition of the car, the sale price, and the effective date of transfer of ownership to the buyer, along with registration and insurance details.
The car’s ownership is determined by the car’s registration papers, so ensure that all formalities are completed once the sale has concluded. This will prove useful during future disputes.
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Check car maintenance records
You can negotiate better on the price once you have detailed records of repairs and maintenance performed on the car. This will also indicate that you’re dealing with a responsible owner and whether he maintained his car well at all times.
Additional Reading: What To Do After Buying A Used Car
With a booming used car market, there’s more sense in buying a used car these days. There are a plethora of websites dealing exclusively with the buying and selling of used cars.
If you’re looking for Used Car Loans then you’ve come to the right place. Take a look at some of the best and most affordable deals on Used Car Loans at BankBazaar.