- Date : 14/09/2020
- Read: 7 mins
Planning to buy a second-hand car? Here is an important second-hand car buying checklist
Considering modern cars are made to last for a long time, buying a used car can be a very smart decision. However, it can be a rather intimidating experience for both, buyers as well as sellers. This is where the following checklist can simplify matters, reduce risk, and convert the transaction into a hassle-free affair.
Second-hand car buying checklist
Before it comes to the process of buying a second-hand car, the challenge is selecting the car you need to buy.
When you are buying a second-hand car, it is possible to get swayed very easily. For example, when you go to a dealership, you might see a seven-year-old Honda City for Rs 6 lakhs and standing next to it you’ll see a four-year-old Toyota Camry (which is a far more premium car) for Rs 7 lakhs. You might convince yourself to spend that extra Rs 1 lakh and pick up a Camry, but the cost of running and maintaining a Camry is far higher than that of Honda City. In the long run, you’ll end up spending a lot more money out of your pocket. Now let’s look at a checklist for second-hand car buying.
1. Check the car’s condition
Despite being a used car, the vehicle you are considering should be in good running condition and must be a good value for money. Take the vehicle for a test drive and get all major systems such as the engine, cooling, transmission, wheels, etc. checked by a trusted mechanic. These checks will help you ascertain whether the car is as well-maintained as the seller claims. Further, you can plan for unavoidable repairs and maintenance and include the same in your budget.
Tip: Ensure that you carry out a thorough check when you go to take the delivery of your vehicle as well. This is important because a dealer might replace some of the components from your seeing of the vehicle to the delivery of the vehicle. For example, he might replace new tyres with old tyres.
2. Registration documents
Is the seller the real owner of the car? Is this the first or the second time it is being resold? The Owner Serial Number in the RC book or smart card indicates the number of times the car has been sold till date. Has the owner paid all dues, including road tax? Ensure the seller provides you with other papers that need to be verified, including the original invoice, NOC from the car loan provider, and road tax receipt.
The car’s transfer is effected when you and the seller sign on RTO Forms 29 and 30. Further, the seller must submit Form 28, which is the NOC for transfer of the car.
3. Car insurance
- Tip 1
- Check the car’s insured value in the policy.
- Why Important?
- It will be a useful benchmark during price negotiations.
- Tip 2
- Track the No Claim Bonuses over the past 2-3 years.
- Why Important?
- Frequent claims may imply frequent accidents requiring repair and maintenance to the vehicle.
- Tip 3
- 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.
- Why Important?
- Not doing so may lead to your insurance claim being rejected in case of any accident or mishap. Only claims related to third parties will be approved under the deemed insurance policy transfer of the law.
4. Documents required
- Proof of sale of the car
- Proof of delivery of the car to your possession
- New RC book issued in your name
- Request from the seller for cancellation of the policy
- Your application for transfer of the policy
Related: How the motor insurance policy add-on covers work
5. Potential modifications
Can you convert the car into a dual-fuel automobile? Can you opt for upgrades for greater comfort, safety, and value? Older vehicles may come cheap but may be impossible to upgrade. A relatively new model is preferable, especially if it comes at an affordable price.
6. Transfer of insurance
- Tip 1
- Add proportional premium paid on insurance policy to the car’s purchase price.
- Why Important?
- If you have paid the premium for one year and are selling the car after six months, then you certainly can ask the buyer to pay his share of the premium.
- Tip 2
- Obtain NCB retention letter from the insurance company.
- Why Important
- The NCB cannot be transferred even if you are transferring the policy. You can retain it and enjoy its benefit when buying a new car insurance policy.
Cancel the insurance policy by submitting the following documents:
- Original policy letter
- Certificate of insurance i.e. Form 51
- Application for issue of the certificate of retention of the NCB
If you are 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
Make sure the insurance company is kept informed about the sale. The last thing you want is for your policy to pay for accidents or repairs after the car has been sold.
Related: Just bought a new car? Here's what you need to do next!
7. Written contract
Don’t finalize your car’s sale on the basis of an oral agreement. Have a written contract detailing 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.
Irrespective of possession, legal ownership is determined by the car’s registration papers. Make sure all formalities are completed at the earliest once the sale has been concluded. This can prove very helpful in case of future disputes.
8. Car maintenance records
Having detailed records of repairs and maintenance performed on the car can help you negotiate a better price. Not only will you come across as a very responsible owner, but the records will also prove that your car was indeed maintained properly at all times.
9. Car loan for second hand car
Car loan for second hand car is available. Just as you do for new cars, you can approach a bank to fund your second hand car. This is provided by banks and various NBFCs in India. Second hand car loan interest rate ranges from 9% to 17%. Be sure to shop around for the best interest rate you can get. Even a small percentage lower can make a big difference to your final price.
Car loan for second hand car come with benefits such as flexible payments, tenure up to 7 years and funding up to 100% of the car valuation. Both, salaried and business professionals can apply for car loan for second hand car. It is important to note that GST on second hand cars is levied at 18%.
Related: 6 things to keep in mind before buying pre-owned cars
Closing thoughts
Do your homework well, make use of online and offline resources and service providers, and rely on plain common sense to strike the right deal when buying or selling a used car. Lastly, carry this buying second-hand car checklist. To lean moreabout motor insurace, visit here.
Considering modern cars are made to last for a long time, buying a used car can be a very smart decision. However, it can be a rather intimidating experience for both, buyers as well as sellers. This is where the following checklist can simplify matters, reduce risk, and convert the transaction into a hassle-free affair.
Second-hand car buying checklist
Before it comes to the process of buying a second-hand car, the challenge is selecting the car you need to buy.
When you are buying a second-hand car, it is possible to get swayed very easily. For example, when you go to a dealership, you might see a seven-year-old Honda City for Rs 6 lakhs and standing next to it you’ll see a four-year-old Toyota Camry (which is a far more premium car) for Rs 7 lakhs. You might convince yourself to spend that extra Rs 1 lakh and pick up a Camry, but the cost of running and maintaining a Camry is far higher than that of Honda City. In the long run, you’ll end up spending a lot more money out of your pocket. Now let’s look at a checklist for second-hand car buying.
1. Check the car’s condition
Despite being a used car, the vehicle you are considering should be in good running condition and must be a good value for money. Take the vehicle for a test drive and get all major systems such as the engine, cooling, transmission, wheels, etc. checked by a trusted mechanic. These checks will help you ascertain whether the car is as well-maintained as the seller claims. Further, you can plan for unavoidable repairs and maintenance and include the same in your budget.
Tip: Ensure that you carry out a thorough check when you go to take the delivery of your vehicle as well. This is important because a dealer might replace some of the components from your seeing of the vehicle to the delivery of the vehicle. For example, he might replace new tyres with old tyres.
2. Registration documents
Is the seller the real owner of the car? Is this the first or the second time it is being resold? The Owner Serial Number in the RC book or smart card indicates the number of times the car has been sold till date. Has the owner paid all dues, including road tax? Ensure the seller provides you with other papers that need to be verified, including the original invoice, NOC from the car loan provider, and road tax receipt.
The car’s transfer is effected when you and the seller sign on RTO Forms 29 and 30. Further, the seller must submit Form 28, which is the NOC for transfer of the car.
3. Car insurance
- Tip 1
- Check the car’s insured value in the policy.
- Why Important?
- It will be a useful benchmark during price negotiations.
- Tip 2
- Track the No Claim Bonuses over the past 2-3 years.
- Why Important?
- Frequent claims may imply frequent accidents requiring repair and maintenance to the vehicle.
- Tip 3
- 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.
- Why Important?
- Not doing so may lead to your insurance claim being rejected in case of any accident or mishap. Only claims related to third parties will be approved under the deemed insurance policy transfer of the law.
4. Documents required
- Proof of sale of the car
- Proof of delivery of the car to your possession
- New RC book issued in your name
- Request from the seller for cancellation of the policy
- Your application for transfer of the policy
Related: How the motor insurance policy add-on covers work
5. Potential modifications
Can you convert the car into a dual-fuel automobile? Can you opt for upgrades for greater comfort, safety, and value? Older vehicles may come cheap but may be impossible to upgrade. A relatively new model is preferable, especially if it comes at an affordable price.
6. Transfer of insurance
- Tip 1
- Add proportional premium paid on insurance policy to the car’s purchase price.
- Why Important?
- If you have paid the premium for one year and are selling the car after six months, then you certainly can ask the buyer to pay his share of the premium.
- Tip 2
- Obtain NCB retention letter from the insurance company.
- Why Important
- The NCB cannot be transferred even if you are transferring the policy. You can retain it and enjoy its benefit when buying a new car insurance policy.
Cancel the insurance policy by submitting the following documents:
- Original policy letter
- Certificate of insurance i.e. Form 51
- Application for issue of the certificate of retention of the NCB
If you are 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
Make sure the insurance company is kept informed about the sale. The last thing you want is for your policy to pay for accidents or repairs after the car has been sold.
Related: Just bought a new car? Here's what you need to do next!
7. Written contract
Don’t finalize your car’s sale on the basis of an oral agreement. Have a written contract detailing 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.
Irrespective of possession, legal ownership is determined by the car’s registration papers. Make sure all formalities are completed at the earliest once the sale has been concluded. This can prove very helpful in case of future disputes.
8. Car maintenance records
Having detailed records of repairs and maintenance performed on the car can help you negotiate a better price. Not only will you come across as a very responsible owner, but the records will also prove that your car was indeed maintained properly at all times.
9. Car loan for second hand car
Car loan for second hand car is available. Just as you do for new cars, you can approach a bank to fund your second hand car. This is provided by banks and various NBFCs in India. Second hand car loan interest rate ranges from 9% to 17%. Be sure to shop around for the best interest rate you can get. Even a small percentage lower can make a big difference to your final price.
Car loan for second hand car come with benefits such as flexible payments, tenure up to 7 years and funding up to 100% of the car valuation. Both, salaried and business professionals can apply for car loan for second hand car. It is important to note that GST on second hand cars is levied at 18%.
Related: 6 things to keep in mind before buying pre-owned cars
Closing thoughts
Do your homework well, make use of online and offline resources and service providers, and rely on plain common sense to strike the right deal when buying or selling a used car. Lastly, carry this buying second-hand car checklist. To lean moreabout motor insurace, visit here.
