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Old 8th May 2013, 14:31   #1
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Default Driver wants loan for a motorcycle. Formalities?

Mods: Please move/ del as appropriate. I am not sure where this falls.

Folks

My driver is asking me to buy him a new bike & says he will pay the money for it in installments over the next year.

I trust the guy but need advise on how to structure it.

Approach 1: can buy it in his name, keep the RC Book, papers etc until he pays up fully. May be even put in my name as lien on the RC book (can this be done on personal loans?). Burden of trust & risk on me.

Approach 2: buy the bike in my name. Take the money from him until he pays up; then transfer the bike to his name at that point. Am willing to absorb any additional charge such transfer involves. (how much would that be?) Burden of trust & risk on him.

I prefer Approach 2 but what do you think?
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Old 8th May 2013, 15:37   #2
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Default re: Driver wants loan for a motorcycle. Formalities?

Well i must appreciate you for your gesture first up. As for the buying process, buying the bike in your name and then transferring it later sounds like the best bet. But there can be a slight problem. Now i have no idea about what kind of person your driver is. But should the bike be involved in any activity namely criminal, with or without the drivers know-how, the bike being in your name could bring you problems.

The first option will be easier for him to get away with should he decide to run away with the bike. I would suggest you sign an agreement stating you are the owner of the bike and have loaned him the bike till manages to repay you in EMI's. No harm in playing it safe.

As for the bike, i would suggest the new Honda Dream Neo. Cheap, reliable, efficient, very low maintenance and a Honda badge.

http://www.honda2wheelersindia.com/dreamneo/intro.html

Hope this helps.

Last edited by balenopower : 8th May 2013 at 15:43.
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Old 8th May 2013, 15:39   #3
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Default re: Driver wants loan for a motorcycle. Formalities?

Suggest:

1) Buy a second hand bike - Low investment - Buy in the name of the driver and cut pay aggressively. While we recommend the incredible value of buying preowned on TBHP, we should suggest that this makes even greater sense for those of lesser means. Keep RC book with you.

2) Use your approach 2 if buying a new bike. Transfer charge / cost when handled by the driver himself (no agent)at the RTO (after dropping you at work) should be less than Rs. 1000. You could use this approach for a second hand bike too if the amount is significant.
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Old 8th May 2013, 15:52   #4
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Default re: Driver wants loan for a motorcycle. Formalities?

However the mode of ownership, the burden of risk is always going to be with you since you are buying the bike and the risk of you driver leaving midway before paying in full is always there. All you can do is continue to have the bike in your name till such time as the money in full is repaid.

Now the flip side. If I was the driver, I would never be willing to pay instalments on a bike not in my name and all papers also with owner, since the chance of him firing me midway is always there and then who is going to fight with a bada saab for money and title?

The only thing which could work is you sign on the Transfer of Ownership papers and keep that in his custody, along with the bike, but do not sign Sale Deed and keep the original of the bike papers with you.

For his protection, you can give him a stamp paper undertaking that this is the arrangement you are getting into, these are the modes of repayment, and that the Sale Deed and original of Bike Papers will be handed over to him on receipt of entire amount.

As counter proof, give him a receipt voucher for each cash repayment, as a record. Keep xeroxes with you.
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Old 8th May 2013, 17:11   #5
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Default re: Driver wants loan for a motorcycle. Formalities?

Quote:
Originally Posted by sridhu View Post
...
I trust the guy ...
sridhu, buy the bike in his name.
If the bike gets into some accident or any other incident, you won't be in trouble. More than that, your driver will feel good and will be serving you better. You considering his request shows that you trust him and believe he won't 'run away' at least for next 3-6 months. By the time half of the amount would have repaid and you can take the risk on the remaining amount. If all works out well, after a year both of you will feel good and will have more faith on each other and people in general.
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Old 8th May 2013, 17:25   #6
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Default re: Driver wants loan for a motorcycle. Formalities?

Have seen a couple of my friends do this stuff. They get the bike registered in driver's name but opt for a loan system. The Car Owner stands surety for the loan amount raised. If the driver decides to part ways then you can repay the loan and sell the bike to realize your money invested into it.

Off course both driver & car owner should agree for the loan process to be taken.

Suggest a Hero Splendor Pro which is quite reliable and economical to maintain/run.
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Old 8th May 2013, 17:28   #7
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Default re: Driver wants loan for a motorcycle. Formalities?

Personally, I'd be worried about having a bike in my name, that's being ridden mainly by someone else every day, be it a friend, a non-immediate family member, or an employee.

As much as you may trust the person, what happens if, heaven forbid, the vehicle is involved in some serious accident and the rider decides to simply run away? Hit and runs happen in some part of the city everyday.

Maybe I'm just being paranoid here, but I think standing guarantee for a loan for the actual rider of the bike makes more sense.

Last edited by am1m : 8th May 2013 at 17:29.
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Old 8th May 2013, 23:45   #8
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Default re: Driver wants loan for a motorcycle. Formalities?

don't take it in your name. that's like penny wise pound foolish. apart from the nuisance of dealing with potential accidents/theft etc. cases, you also don't want to look like a loan shark. the point is to come across as a good employer if at all you want to do something about it.

if you can afford and that guy has been doing a great job, sponsor part of the purchase especially if your driver is the splendor type of guy and not one of those pulsar 180 or whatever. all in all, fringe benefits work really well with drivers.

a bike can benefit you also. he can be on-time, on-call and use the bike for errands instead of car if possible.

Last edited by androdev : 8th May 2013 at 23:51.
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Old 9th May 2013, 01:35   #9
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Default re: Driver wants loan for a motorcycle. Formalities?

In 2010, my parents bought our maid a TVS Scooty so that she could travel easier to our new house. My father bought the scooty in his name and the maid accepted a 75% cut in her monthly salary. Once the all the papers came my father kept the originals and gave her the photocopies with a letter signed by him stating that she was our maid and that she was using the scooty under agreement and that the original papers were with my father in case anyone concerned wanted to see them. Our maid has since served us sincerely for the entire period since she got the Scooty and has not given us any reason to complain.

My suggestion based on the above experience would therefore be to go for the 2nd option. As for any problems related to misuse of the bike we would have to agree about one important fact that be it in his name or your name the bike will be in your driver's possession most of the time and not yours. If you trust him enough and if he has proved himself sincere then there should be little worry about any problems related to accidents or criminal use. Simply put down your conditions firmly to him regarding how you expect him to use and ride the bike because initially it will be your investment. After all, remember that this same person also has access to your car.

Buy him a simple bike like the Hero Splendor or the Honda Dream. These are good cheap bikes and it will be easier for him to repay you for the bikes. The bike will also definitely be an indirect boon to you as well since he can be on time, it willl be easier for him to go back to his house if he has to stay till late for an unforseen reason and it will be easier for him to go on small errands for you. In the end, it all boils down to trust.
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Old 9th May 2013, 10:20   #10
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Default re: Driver wants loan for a motorcycle. Formalities?

It is so nice of you to help your driver this way.
Two ways of doing this @sridhu

(1) Focus on the relationship between you and the driver in the long run for mutual benefits.
(2) Focus on the risks involved on your end.

If you focus on (1) I suggest you ask the driver to put down a small amount like 3k or 5k. Get him a new or used bike in his name itself and deduct the amount from his salary. Make this deal very clear to him. You need to act like you are a financial institution yourself. Keep the RC and spare key with you. If he gets a bike just like that he may not feel the importance and value the help. Both of you might start expecting more from each other. The relationship will be spoilt if your driver begins to think that you are demanding more from him ever since you helped him.

If you focus on (2) then put down everything in writing with few witnesses from his family and get him a bike. Since you already have things in writing you may register the bike in his name or your name.
Let him know that if he works really well and exceeds expectations like coming to work on time, maintaing the car and doing any extra work and all that you may also be willing to write off a part of the loan amount.
Good luck!
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Old 12th May 2013, 19:04   #11
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Default Re: Driver wants loan for a motorcycle. Formalities?

Thanks Folks. Was on the road - could not reply earlier.

I had not thought of the legal & the relationship angles in this. Think you folks are right.

Will underwrite the loan with the bank & hold the papers. That seems to be the right way to go about this.

Other than Hero Splendor Pro & the Yuva any reccos for the commuter bike? He is interested in mileage but may not have thought about reliability or maintenance. He is clear no scooter will meet his mileage requirements.

Helmet - ?
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Old 5th June 2013, 19:26   #12
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Default Re: Driver wants loan for a motorcycle. Formalities?

So, the bike purchase is happening over the weekend. His heart is set on a Hero Passion Pro. Any opinions on the bike? Basically mileage & long term cost of ownership are the key criteria.
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Old 5th June 2013, 19:31   #13
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Default Re: Driver wants loan for a motorcycle. Formalities?

Good bike choice. In our family, we have always done it through this way - driver pays 10k, rest is paid for by family, which driver repays back over two years. Its been going fine till now.
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