Scam or not: Used car buyer asks RC & insurance copy for loan

I am not comfortable sharing the documents before the transfer of ownership.

BHPian tilt recently shared this with other enthusiasts.

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.

I am not comfortable giving this to anyone before I receive the full payment for the car and before I transfer the ownership to the buyer.

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

Here's what BHPian graaja had to say on the matter:

When I sold my Jetta, the buyer had also applied for a loan. The banker (some private lender) visited my place along with the buyer and inspected the car and RC before sanctioning the loan. I did not have to give them any copy.

Unless the loan is processed in your name and your signature is there in the papers I doubt if the bank will be able to confiscate your car. If the car is in your name and the loan is in the buyer’s name, then too, I think the bank cannot confiscate your car. So this can be a genuine request.

Here's what BHPian gkveda had to say on the matter:

Maybe a scam and probably, maybe genuine too.

Suggest you first check with an independent bank as to what documents are required for them to process a used car loan. If the bank says current RC copy and insurance policy copy is required for them to process the loan, maybe the buyer is genuine (Please note: Maybe)

As a second step, find out which bank the buyer is taking the loan, and visit the bank along with the buyer. If the bank asks for the said copy of documents, handover the copy of documents to the bank directly and ask them to give the acknowledgement stating they have received the copy of documents for the purpose of sanctioning a loan to the buyer name and the bank can neither hold the current owner liable for recovery of loans nor use the doc copies for recovery of loans sanctioned to the third party.

Then, you will have all the necessary evidence to prove that you handed over the copies of the docs to the genuine bank for a specific purpose.

And with this, the bank will also not be able to come to you if in case the buyer does not purchase your car.

Here's what BHPian KA18 had to say on the matter:

Most of us are giving mixed views about this.

I being an insurance agent, have RC and insurance copies of many of my customers.

There is hardly anything that I can do with the documents, let alone try to con people.

Unless someone is making away with a stolen car and trying to pass it on to someone by forging the documents using your RC as a base, which seems highly improbable.

Why not ask for a copy of the buyer's identity proof like Aadhar, PAN card, driving licence etc.? This way you can be sure who's taking the papers.

If you are apprehensive, ask him to make an agreement on stamp paper of minimum judicial value stating the purpose for taking the copies of the documents and get it notarized.

Coming to your doubt, it is not possible to take a loan based on just the RC and insurance copy, even if it were possible, the loan will be sanctioned only to the RC owner and not anyone else.

As long as the originals stay with you, it should not be a problem.

Here's what BHPian abhishek46 had to say on the matter:

The buyer cannot do anything with your RC xerox & insurance copy.

As long as the original RC Card is with you, and you have not signed on the RTO Transfer Form, the Car is yours, by all means.

Check out BHPian comments for more insights and information.