The auto industry is evolving rapidly, and the prices of cars are only rising. So, to put it simply, new cars are becoming more expensive every year, making them a very high-value purchase for the average man. And quite ironically, despite the steady increase in costs, the average lifespan of a car is dropping, bringing good news to future used car buyers! In the fiscal year 2020, India recorded a sale of over 4.4 million units of pre-owned cars (source: Statista Research Department). Simply imagine, how big is the second-hand car market in India?
Read on to get a better understanding of this market.
Why Should You Buy a Second-hand Car?
Save money and even upgrade your segment
Going for a used car means that you have to pay a lot less than the original value of the vehicle (depending on the year of production and the kilometers covered), which means that you can save some significant money.
Tension-free drive 24 X 7
The used car comes with its own advantages. The primary advantage must be a feeling of driving stress-free, without the jitters of having the first tooth or scrape, something that only a brand-new car is likely to lead to.
Get certified used cars with a warranty
As the auto industry has changed, the way used vehicles are marketed and bought has also evolved. Now, you don't really need to rely on the verbal assurance of a smart car broker, dealer, or person that used the car to know the condition of the car.
You have the power of qualification at your fingertips! You can easily go online to search for car certifications that are meticulously checked by a certified car engineer to make sure your purchase is free of any kind of fraud.
Not only this, but you can also get an extra post-sales warranty to make sure that the used car you just purchased works more like a new one!
Slower Depreciation means you lose less Money
A used car depreciates at a slower pace than a brand-new vehicle. Let's find out how: the vehicle's depreciation is at its highest in the first three years of purchase. When you purchase a used car, you can obviously buy it at a price that has already gone through substantial depreciation.
Factors to Consider Before Buying a Second-hand Car
Condition of the car
Despite being a used car, the vehicle you are considering should be in good working condition and a good value for money. Take the vehicle to the test drive and measure all major systems, such as engine, cooling, transmission, wheels, etc., tested by a trusted mechanic. These tests will help you decide if the car is as well-maintained as the seller says.
Is the seller the owner of the car? Is this the first or second time it's been sold? The Owner Serial Number in the RC book or smart card shows the number of times the car has been sold to date.
Ensure that the seller can supply you with other records that need to be checked, including the initial invoice, the NOC from the lender of the car loan, and the road tax receipt.
The transfer of the car shall be put in effect when you and the seller sign RTO Forms 29 and 30. In addition, the seller must send Form 28, which is the NOC for the transfer of the vehicle.
Check the insured worth of the car in the contract. It would be a valuable benchmark in price negotiations. Track the No Claim Incentives for the past 2-3 years. Frequent claims can include frequent incidents requiring repair and maintenance of the vehicle.
Switch the car insurance policy of the seller in your name or purchase a new policy within 14 days of the date of the transfer of the car. If you do not do so, your insurance claim will be denied in the event of an accident or mishap. Just like what happened with Akshay, when he purchased a second car from one of his friends. Though he transferred the car registration in his name but didn't transfer the policy. Hence, when his car met with an accident, his claim was denied as the policy was not in his name. The car registration and insurance policy both should be in the same person's name then only an insurance company will approve your claim request. So, make sure you either transfer the existing policy in your new or buy a new one to keep your second-hand car insured.
- Evidence of sale of the vehicle
- Evidence of delivery of your car to your possession
- Fresh RC book in your name
- Request for cancellation of the policy from the seller
- Your order to transfer the policy
Potential for modifications
Can you turn the car into a dual-fuel car? Can you select upgrades for greater convenience, protection, and value? Older vehicles can come cheap, but they may be impossible to upgrade. A relatively new model is preferable, particularly when it comes at an affordable price.
Things that a Seller Should Keep in Mind
Transfer of Insurance on time
Add the proportional premium paid to the insurance policy to the selling price of the vehicle. If you pay the premium for one year and sell the car after six months, you will definitely ask the seller to pay his share of the premium.
Obtain the letter of retention of the No Claim Bonus from the insurance company. The No Claim Bonus cannot be moved even though you are transferring the policy. You may keep it and benefit from it when you purchase a new car insurance policy.
You also have to cancel the insurance policy by sending the following documents:
- Insurance Certificate, i.e., Form 51
- Request for the issuance of the certificate of retention of the No Claim Bonus
If you are selling your old car and purchasing a used car, you must send the following additional documents:
- Form 29, which is the form for the transfer of ownership of the vehicle.
- Form 30, which is the vehicle transfer report.
- Copy of the RC book published in the name of the new owner
- Evidence of delivery to the current owner of your old car
Make sure the insurance provider is kept up to date with the sale. The last thing you want to do is pay your insurance for injuries or maintenance after the vehicle has been sold.
Always have a written contract about the sale
Don't finalise the selling of your car on the basis of an oral agreement. Have a written contract specifying the condition of the vehicle, the selling price, and the effective date of the transfer of ownership to the purchaser, along with the registration and insurance information.
In either case, legal ownership is determined by the registration documents of the vehicle. Making sure that all formalities are done as soon as the sale has been concluded. This can prove very beneficial in the case of potential conflicts.
Keep car maintenance records to strike a better deal
Keeping accurate records of repairs and maintenance performed on your car will help you secure a better price. Not only can you come off as a very responsible driver, but the documents will also show that your car has been well maintained at all times.
What are the Documents Required for the Transfer of an Insurance Policy?
- A fresh copy of the certificate of registration/form 29
- Old policy document
- No objection clause (NOC) from the previous holder of the policy
- New application
- Inspection report (to be carried out by the insurance company)
- No Claims Incentive sum difference
Do your homework well, make use of online and offline resources and service providers, and rely on common sense to make the right deal when buying or selling used cars.