Documents to Check When Buying a Used Car in India

Automobile sales are doing really well in India. The used car market has definitely had a role to play in this growth. However, it is still quite confusing how to get a used car ownership transferred to another person. Although not many documents are needed, the whole process is quite tedious. This article tries to lay out for you what the documents needed for car transfer are.

Why Should Car Ownership be Transferred?

Owing to the reasons given below, it is quite important that the ownership of a second-hand vehicle be transferred:

1. For Insurance cover to come into effect, Insurance companies mandate that the Registration Certificate (RC) be in the name of the new vehicle owner itself.

2. In case of an accident, the person whose name is on the RC will be detained for questioning.

3. The RC contains the address of the owner. If not transferred to the owner, all documents sent subsequently will be sent to the previous owner’s address.

Types Of Sellers

Used car sellers are mainly of 3 types:

1. Individual sellers - Given that a middleman is absent, buying directly from an individual seller can get the buyer a good deal on price. It is still important that the seller is checked for authenticity and reputation before the deal is made. If you get a mechanic to perhaps check the vehicle for you before the purchase, the process might very well be worth it.

2. Car companies - Most car brands have their own used car showrooms. This is perhaps the safest way you can get a used car. The transfer process will also go through without needing much of your intervention, and the car often comes with a warranty as well. Free servicing, exchange bonuses, etc. can also be expected. However, the price can be on the higher side, as compared to an individual seller.

3. Used-car dealers - Used  car dealers provide you the luxury of not having to go through the paperwork much. Just make sure that ownership is not with the dealer - that would technically make you the third owner. This reduces resale value significantly. Also inquire if warranty is provided - as it often is.

Documents Needed to Buy From A Private Seller

Check for the following documents, as their transfer is quite important:

1. Registration Certificate (RC) - The RC will have important information about the vehicle such as its engine number and chassis number. The buyer has to check the state in which the vehicle was initially registered. If the buyer will be moving it to another state, the registration will have to be done there. The buyer should ensure that the document is not the duplicate copy of the RC (marked by the acronym DRC); in case it is, he/she should check the reason with the seller.

2. Invoice of Car Purchase - The buyer should be given an invoice for the purchase of the vehicle. Although this will be made available when the used car is bought from a company or dealership, an individual seller may not be able to provide it. In such a scenario, the seller should provide a receipt to the buyer that will serve the purpose.

3. Insurance Documents - If the buyer intends to get the existing insurance policy transferred to his/her name, the process should be initiated well before the sale. While the insurance is being transferred, the buyer should check whether the premium was paid regularly, the claim history of the seller, and the expiry date of the policy. The buyer should also have a clear idea about the terms and conditions in the policy documentation, particularly the exclusions.
   If the buyer is looking to buy a new insurance policy for the used car, then the process should ideally be done before the sale so that there is no break in insurance. It should be noted that the buyer will find difficulty in getting insurance for a used car that is more than 15 years old.

4. Service Book - This will give details on the servicing history of the car. The buyer will have a better idea of the condition of the vehicle through this. If the car has been serviced as per the schedule then it is more likely to be in better condition that a car that had infrequent services.

5. Forms 28, 29, 30, 32, and 35 - Forms 29 and 30 are mandatory documents required for buying a used car in India. The second-hand car registration procedure requires the seller to sign two copies of Form 29 and a copy of Form 30 and hand it out to the buyer. The buyer will then submit the same at the RTO for transfer of ownership.

   • Form 29 is the notice of transfer of car ownership

   • Form 30 is the application for the intimation and transfer of car ownership

   • Form 28 is the No Objection Certificate that is mandatory when the car ownership is transferred between states

   • Forms 32 and 35 are needed when the seller has taken a loan to purchase the car

In case the car was bought through a loan, the buyer will have to get the No Objection Certificate from the financing bank through the seller. This document will clarify that the complete loan has been paid by the seller. If this is not procured, the buyer may be held responsible for repaying the loan after the transfer of ownership

1. Receipt for road tax - Road tax is paid only once, i.e., at the time of registration of the car by the first owner. If the road tax is not paid on time, it can accumulate a huge penalty over a period of years. There could even be a situation in which the new owner is liable to pay the same. The road tax varies between states and is usually between 2% and 18%. It is the responsibility of the seller to provide a road tax receipt to the buyer. 

2. Certification for bi-fuel kits - If the car being sold has been configured to run on two types of fuel, the seller should ideally provide the bi-fuel certification to the buyer. A No Objection Certificate is also required from the RTO, indicating the same. The bi-fuel kit usually has a guarantee of 5 years from time it was fitted to the vehicle. So the buyer should ask for the sale receipt of the kit too.

3. PUC Certificate - It is important to procure the Pollution Under Control (PUC) certificate from the seller, as this certification is mandated by the law.

4. Owner’s Manual - Do not forget to get the owner’s manual from the seller, as this has important information about the vehicle. The servicing schedule is usually mentioned in the car owner’s manual, and this should be followed if applicable.

Other documents required for the car ownership transfer process include the seller’s and buyer’s ID and address proof, PAN Card of the buyer, and Clearance Certificate (CC) from the RTO where the vehicle was originally registered.

The aforementioned points are also relevant when you make a used car purchase from a pre-owned car dealer or the car company itself. The procurement of documents and the entire ownership transfer process is, in fact, much easier when the purchase is made from the car company.