[priyankarb]

My two paisa from an almost recent experience of selling my car in November'21:

The buyer requested copies of RC and Insurance for bank loan purposes to which I upfront replied that he may not be able to get a loan on a 2011 model car from a bank, though an NBFC may grant the same plus, I told him that I had other prospective buyers, so would rather take those offers. The gentleman sheepishly admitted that he actually needed to show them to one of his relatives who is an EXPERT in vehicle documentation for verification so that he does not face issues in the future (I actually guessed so!). Eventually, he came over to my place with cash and I proactively took him through the Parivahan portal to help verify for his mental satisfaction and also initiated the transfer for him for ~ Rs 500. The same relative had quoted him Rs 8000 for the work. So, in some cases, it's a harmless old school thought and people try being creative while asking for docs. That said, there are smarter scammers who have evolved with newer moves that we may not have been able to think through today, so extra caution may help!

Cheers

[drsnt]

Originally Posted by tilt

Mods: please move this to an appropriate forum in case this is the wrong one, thank you.

Is this a scam? I am concerned that the RC and/or insurance could be misused to deprive me of my money and my car - say a scammer could use my RC to get a loan somewhere and keep the money, and then the lender comes after me for the car.

Is this a genuine requirement for buyers to buy a used car on loan?

What can I do to protect myself?

Thanks and cheers

Having sold almost 12 cars in last 12 years and bought equal no of pre-owned. Let me give some perspective. Firstly having a copy of RC or Insurance will not entitle anyone to a loan or any legal liability on you. Fraudsters can scam any people and that does not mean you are responsible for it. It's the Bank duty to verify details not yours and they are smart enough to cross-check. An insurance copy is needed for IDV and registration is required for other details. It will help banks to calculate finance value etc. Even I ask for an RC copy and Insurance for cross-checking details of the vehicle especially if it's in another city. It prevents me the hassle of going for a test drive only to find that documents are not matching as per the description. RC helps in finding number of owners, hypothecation, fitness validity etc, Insurance helps in knowing previous claim status.

But that aside unless your car resale value is 8-9L plus I would suggest you full payment instead of loan route. The reason is that many companies will release finance directly to you after the transfer of RC. Now, this takes time especially as they wait for a printed RC copy to be available and in case if finance is rejected due to whatever reason you will be struck. Since my most cars are under 10L, I stick to full payment before transfer and ask the buyer to settle finances at his side. I had this issue when I was selling my Ertiga, Buyer was from another city but in the same state, He was also a sub-dealer for Mahindra. He even got a letter from Mahindra Finance that they will finance the vehicle. But I clearly told him that I need full payment before transferring and handing over the car. He kept on requesting a new timeline for transfer and assured me that he will get finance before transfer finally after 3 months I sold the car to another person as he could not procure finance without transfer.

[fazayal]

Nothing wrong in giving copies of the RC book and insurance. Banks would need them to verify before giving loan. They might even come to physically check the car at your place before disbursing the loan and might even ask to check original documents. All part of procedure. Just don't hand over original documents or sign on any RTO forms before getting money.

If one buys a used car, even by paying in full, it would be a good idea to ask for copies of RC book and insurance to confirm and document that whatever the seller is telling is true.

[dsuman]

I recently sold my sister's used KUV 100. The buyer wanted to Finance the car. Once price was finalized We shared the RC, Insurance and Pollution copies. The buyer applied for a loan, Bank did its verification, Loan was sanctioned, Bank agent called us to RTO and got the car transferred to the buyers name. Once vehicle transfer was done the money was directly transferred from Bank to my sister's account. Banks require these documents to process the Loan. So cannot really call this a scam.

Bank in this case is HDFC. This is the actual process. In case of new cars, the showroom does all the Finance coordination so we hardly know the effort. In our case the buyer knew the margin money to be paid and we received that money before we went for Registration.

Note: Private Finance companies provide loan on existing automobiles so be careful and do your due diligence. There are a lot of frauds who want to fund themselves with your money fraudulently. So your concern is justified. PM me in case you want to discuss. Make sure to visit the Financier. HDFC asked for my sister's bank account canceled cheque as well. We visited bank to validate as well.

[lordrayden]

One of the cars I sold was bought by a person who was taking a loan from Canara Bank. The bank wanted a copy of the car's RC, Insurance and Emission Certificate as part of the buyer's loan approval process. I sent soft copies of these document to the buyer. Post that there was a (very thorough) inspection of the car. After all this his loan was approved.

This is standard practice for second-hand car loans. So some potential buyer asking for these docs in itself doesn't seem like a scam.

[RGK]

Originally Posted by tilt

A prospective buyer of my car wants me to give him a copy of the RC and Insurance. He says it is to enable him to get a loan from the bank.

Nothing wrong with giving your photostat copies of RC, Pollution Cert, Insurance and even the invoice copy.

The lender will verify the document copies and even come to your place to check with the originals. After the complete settlement of the mutually agreed amount, sign the "TO - Transfer Of Ownership" forms and get the delivery note duly signed by the purchaser along with his aadhar copy.

Instruct him to do the name transfer within 30 days.

[skanchan95]

I don't think there is anything wrong or risky in giving Xerox copies of the RC and insurance copy as the loan dispersing bank asks for it to start processing the loan papers.

In second hand car deals, the amount will only get dispersed to the bank account owner of the vehicle only after the bank verifies original documents physically and after receiving a valuation report from a bank appointed evaluator. Nowadays banks are also required to depute an officer or a manager to verify the owner of the vehicle and original documents in person and only then funds are transferred after verification of bank details of the current vehicle owner. I sold my Figo was sold to someone this way where the buyer to took a loan from the bank. The buyer's bank verified everything before transferring the amount to my bank account. I was required to visit the loan dispersing bank with the buyer for verification with the vehicle documents, my original ID/address proof & bank account details proof(my passbook/cheque book/bank verified account statement).

So chances of a fraud are minimal in such cases unless some rogue bank employee is involved. Besides that, no one can do any mischief with regarding to the ownership
of a car with just Xerox copies of the RC or insurance. The best they can do with it is to sell the details to some insurance companies or agents.

[funkykar]

Safest is for you to ask the buyer to obtain a B Extract of RC and they can hand it to the bank.

Many times buyers ask for RC copy also to prove if the seller indeed owns it or is a dealer. Trust plays a very important role here. Always assess the buyer to an extent and then move forward. One can also mask certain details on RC and send them to the potential buyer.

[FHW]

It is required to verify the vehicle details prior to processing of used car loan. RC copy submission to the bank shouldn't be an issue.
Moreover the disbursement of used car loan goes to present owner of the car either by way of account payee draft or direct transfer, in normal course of business.

[samee_arian]

In this day and age of various frauds and identity theft concerns, I can appreciate the issue been raised by you, however as far as I know, these documents are not that difficult to procure nowadays.

I am currently in process of buying a pre-owned car from Ola Cars and the sales rep has readily provided copy of RC and insurance when I finalized a couple of cars and inquired about ownership and coverage status. All I was asking for was a confirmation from him and I was provided this information without any hesitation without even asking for supporting documents. I therefore believe that your concern while valid, you should not let it weigh too much.

I hope you end up getting a good price for your car.

All the best.

[san.gaurav]

I'm in similar situation where I'm selling my car. The individual buyer plans to take the loan from the bank for partial amount. He told me that once bank approves the loan and we are ready to sign the transfer documents, the bank would ask me to handover original RC and sign the transfer documents but the loan disbursement would be done by the bank later after 24 hours or so. Is that right? Buyer is ready to pay upfront the remaining amount but I would be required to wait for finance amount.

Could someone please share their experience in selling car to a buyer opting for finance? Would bank disburse loan only after RC is transferred? How can I secure myself from any fraud