• Car Insurance For Used Cars In India

    The used car market in India is growing by leaps and bounds. Getting a second-hand vehicle is a very smart decision, considering the fact that there is a wide difference in price between an old and new car. It is also possible to effortlessly narrow down on a used car as there are businesses that specifically cater to the same.

    However, the entire process may be intimidating for both sellers and buyers. In this situation, the checklist below will be very useful in ensuring that the transaction happens in a hassle-free manner.

    Car Insurance For Used Cars

    Checklist For Sellers Of Used Cars

    In case you are the seller of the car, there are certain things to bear in mind:

    • Insurance transfer - Ensure that you transfer the insurance policy to the new owner, if requested for. In case you have paid the premium for its insurance, you should add the proportional amount to the cost of the car.

    Consider a scenario in which you have paid the annual premium for your car’s insurance and 5 months later, you decide to sell it. You can add the remaining premium, i.e., the amount corresponding to the insurance for 7 months to the cost of the vehicle, as the new buyer would then be paying for his share of the premium.

    • You should remember to get the NCB retention letter from your current insurance provider. You should know that transfer of insurance does not imply that the NCB you earned under the policy will be transferred. In fact, the NCB is a reward from the insurance provider to the car owner for refraining from raising claims in a policy year. So, at the time of a car sale, you can preserve the NCB you earned through the NCB retention letter and use it on the insurance of another vehicle you own.
    • In case you are cancelling the insurance of your car, send a written notification to your insurance company and get a confirmation from them. This way you can avoid being charged premium for the insurance of that vehicle in the future. The following documents are required for cancellation of your existing insurance policy:
      • Original policy letter
      • Form 51, i.e., the certificate of insurance
      • Application for the retention of NCB
    • Car maintenance records - If you keep detailed records of the maintenance activities and repairs performed on your vehicle, you may be able to negotiate with the buyer on a better price. Additionally, you will appear to be a very diligent owner, improving your chances of striking a better deal.
    • Written contract of sale - Ensure that you have a written contract that explains the condition of your car, the date of transfer of ownership, the sale price, the insurance details, and registration particulars. Legal ownership of a vehicle depends on its registration papers; so make sure that all formalities are completed after the conclusion of the sale agreement. This can also help you in the event of disputes in the future.

    Checklist For Buyers Of Used Cars

    When you are purchasing a used car, pay close attention to the available models and decide on an appropriate one. You may be tempted to go for high-end cars owing to the attractive price tag on offer. But make sure that the maintenance and insurance cost of the vehicle will be within your budget. You have to think about the expenses you will incur in the long run and act accordingly. Apart from this, listed below are certain factors that you should consider:

    • Assess the condition of the vehicle - The vehicle you are planning to buy should be in good condition. Take the car for a test drive and check how it works. Pay close attention to the engine, transmission, cooling, and wheels; you may even get these checked by a mechanic. This will help you in determining whether the car is a value-for-money proposition. After buying a used vehicle, when you are at the dealership to collect it, you should inspect the car again. This is crucial because in the event of the dealership not being an established one, the vehicle parts may be replaced after your assessment. For instance, the dealer may exchange new tyres for old ones. So be careful when you go and collect the vehicle.
    • Registration details - Make sure that the seller furnishes all papers required for verification of ownership and registration. Validate whether the seller is the actual owner of the car and check the history of change in ownership of the vehicle. Also ensure that the owner has paid all dues and has the road tax receipt. The original invoice of the vehicle and the No Objection Certificate (NOC) from the car financing authority is mandatory as well.
    • Insurance details - Check the Insured Declared Value (IDV) of the vehicle in the insurance policy documentation. This is very important as the IDV is a benchmark of the value you are liable to receive from the insurer in the event of a total loss claim. Keep track of the No Claim Bonus (NCB) earned under the insurance of the car for the past 3 years. This is useful in determining the frequency at which the car was involved in accidents and underwent repairs.

    If required, you can transfer the seller’s motor insurance policy in your name. Alternatively, you can buy a new car insurance policy within the first 14 days of transfer of ownership of the vehicle.

    • Check for modifications - When buying a used car, you should check whether it is possible to get it upgraded for greater safety, comfort, or value. You may have received a second-hand car at a great price, but it may not be conducive to upgrades. So, make sure you have checked it thoroughly before signing on the dotted line.

    FAQs:

    1. How do I decide on a used car in India?
    2. Finding the most appropriate used car can be a challenge. The basics involve understanding your budget and the size of car that would suit your lifestyle. When assessing the cost of purchase, you should also consider the maintenance cost of the vehicle that plays a significant role in the long run. If you have a big family, then choose a car that has more seating than a small car.

      You should check the past condition of the vehicle and get all the right documents so as to establish that it is not a stolen vehicle. Also, think about the estimated duration for which you will be in possession of the vehicle. In case you intend to keep it for a longer period, you can consider buying a new car instead of a used one.

    3. What are the advantages of buying a used car?
    4. When looking to buy a car, you will find that used cars come at a fraction of the cost of a new one. This is particularly useful for cost-conscious buyers. Currently, Maruti tops the list in the used cars market. Another advantage of choosing a used car is the fact that you can save considerably on the premium of insurance of such a vehicle.

    5. What are the disadvantages of buying a used vehicle?
    6. One of the most crucial aspects that you have to bear in mind when buying a used car is the authenticity of the source of purchase. The used car market is prone to fraud; so be very careful and pick a source that is trustworthy. Also, ensure that the vehicle you are buying has the following papers:

      • Registration certificate that shows the ownership history
      • Car insurance certificate
      • Original invoice and bills on the service work done
      • Pollution Under Control (PUC) certificate
      • Certificate from the municipality on the registration of the vehicle (This is relevant only for cars that are registered in a municipal area)
    7. Can I get a car loan for buying a used car?
    8. Yes, there are several banks that offer car financing for used vehicles. The interest rate on the loans for used cars is typically higher than that offered for new cars. The financing bank would inspect the vehicle and then offer the loan

    9. Where can I buy used cars from?
    10. The most convenient option is to buy it from a friend or relative. There are several used car sales portals online and offline; so explore all the options before deciding on a vehicle.

    GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017

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