By: Mr. Sumit Garg, MD & Co-founder of Luxury Ride
For decades, owning an automobile was regarded as a sign of wealth and status. A journey in your own car was a luxury that not everyone could afford. That has altered with the rise of the used automobile market. Having a car has grown more convenient and cost-effective.
In India, not everyone owns a car. This shows that the pre-owned car market has a lot of room for the development. The used automobile market in India has been steadily growing in recent years and has been showing promising trend for the future.
In order to cater to this growing demand, the used car industry is coming up with many choices. Owing to this the segment is getting organized at a much faster pace. But prior to purchasing a pre-owned car, the customer must be well aware of the intricate paperwork required for the transfer of the vehicle.
Before delving into the important documents required, let’s elucidate on why it is necessary to transfer the ownership of the second-hand vehicle.
- Firstly, the insurance companies necessitate the transfer of the Registration Certificate, also known as RC, in the name of the new owner.
- Secondly, in case of an accident the owner of the vehicle is called for questioning. If the RC has not been transferred in the name of the new owner then the original owner will be detained for questioning. Hence, it is important to transfer the RC in the name of the new owner during the purchase.
- Thirdly, the vehicle documents are always sent to the address mentioned in the RC. Therefore, in case the RC has not been transferred then the documents will be delivered to the original owner.
Having taken a look at the importance of paperwork during the purchase, let’s understand what all documents are required for buying the pre-owned vehicle.
- Registration Certificate
All the essential information of the vehicle like engine number and chassis number is there in the Registration Certificate or RC. Hence, it is a very important document containing the complete overview of the car. In addition to this, if the car is purchased in another state, then it is required that the registration is done there itself. Here, it is important to make sure that the document is not a duplicate copy of RC.
- Insurance
If the buyer wants to transfer the remaining insurance policy in his/her own name, then the process must be initiated prior to the sale. Here, it is important to check the insurance expiry date, claim history of seller and see if the premium was being paid regularly or not. Thoroughly understand the terms and conditions of the policy documentation, and most importantly about the exclusions.
In case the buyer desires to purchase a new insurance policy, even then the initiation must be done before the sale to avoid any sort of insurance discontinuity. Here, it is important to note that getting insurance for a car that is more than 15 years old is very difficult.
- Form 32 and 35
Before closing the deal, make sure that there is no pending loans for the buyer. Thoroughly check from where the seller has taken the loan, from a financier or a company. Obtain a no-objection certificate from the financier claiming that the entire loan has been paid off.
- Service Book
Take a thorough look at the service book to know about the condition of the car. Going through the servicing history will help in getting the overview of the condition of the car. Generally, a pre-owned car can be said to be in good condition if the vehicle has been serviced timely from an authorized service center.
- Road Tax Receipt
Road tax is a one time payment that is paid by the first buyer at the time of the registration. Failing to pay the road tax timely can result into accumulation of huge penalty which can cost lakhs of rupees. In case the new owner has not taken the road tax receipt from the seller then the penalty cost will fall on them. Hence, it is really very important to take the receipt from the seller. Also, note that the road tax varies between different states and generally ranges between 2% to 18%.
- Vehicle purchase invoice
The buyer must ensure to get the vehicle purchase invoice for the used car at the time of buying. Purchasing from a company or dealership makes it easy in acquiring the document but in case purchased from an individual seller then it is difficult to obtain the document. Here, the seller should provide the buyer with the receipt ot serve the purpose.
- Dual fuel certification
If the car has the configuration to run on two types of fuels, ask for dual fuel certification and a NOC from RTO that will enable the car to run on both fuels. The bi-fuel kit generally comes with a guarantee of 5 years which starts from the time it has been fitted to the car. Therefore, a buyer must get a sale receipt of the kit as well.
Along with the documents mentioned above, seller’s and buyer’s ID and address proof, buyer’s PAN Card, Clearance Certificate (CC) from RTO are also required at the time of ownership transfer.
