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Old 16th July 2017, 20:51   #31
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Default Re: Buying a car under hypothecation

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Originally Posted by petrolhead_chn View Post
Bumping an old thread

If one wants to buy/sell a car which is a year old and is loaned by a bank, what are the best ways?

1. The buyer is ready to pay the total outstanding in cash/cheque to the seller
2. The buyer wants to take delivery of the car along with a copy of RC as soon as the amount is realized
3. The buyer is willing to wait for the seller to carry out the loan closure/NOC procedures

Is it safe to handover the vehicle to buyer without transferring the ownership or even before getting the NOC?

What is the best way to handle this situation for a win-win outcome for both seller and buyer?
Things work out pretty well if buyer and seller know each other. If they don't know each other there should be some precautions taken.

There are three things which can be used as a "security". The car, car papers and transfer papers.

If I am selling my car, after the price is negotiated, I would take the potential buyer to the bank. Bank would give the statement of pending loan. If pending loan is 2 lakhs and value of car is negotiated at 2.5 lakhs, I would tell the buyer to pay 2 lakhs to the banks, 30 thousand as cash to me and he can keep 20 thousand as security. I will give him signed transfer papers and the car's documents in original but keep the car with me if till the time cheque is not cleared. If he paying to the bank by cash of wire transfer, no harm in giving him the car if bank confirms that they have received the money for forclosing of loan on a receipt. Once, I receive form 35 and NOC from the bank which usually takes 7-10 days, I would hand them over to the buyer and take 20 thousand cash from him which was pending.

If I am buying a car and conditions are same (2 lakh loan, car price 2.5 lakhs), I would first check from the bank if there are any top up loans taken keeping the car as a collateral, once the bank confirms in writing that there are none, I would do a wire transfer to the bank of 2 lakhs, pay 30 thousand in cash or wire transfer to the car owner and keep 20 thousand as a deposit till he gives me the Form/35 NOC. Will take immediate custody of the car, documents and transfer papers. Once the seller hands me the Form/35 Noc, I would pay 20 thousand cash or wire transfer to him immediately.

In case where the pending loan is higher than the negotiated value of the car Eg. Car loan in 2.5 lakhs and negotiated price is 2 lakhs

The buyer should first remove 20 thousand security deposit for Form/35 NOC. So the buyer will pay 1.8 lakhs to the bank and seller would pay 70 thousand to the bank. Once buyer receives form 35/Noc from the seller, he can pay him 20 thousand.

I hope I am clear.
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