Buying a car from a direct owner? Here's all the paperwork you will need to complete

Are you planning to buy a car from a direct owner? We've listed all the paperwork that needs to be completed before the car can be officially handed over.

Buying a car from a direct owner ensures room for negotiation, as one does not need to worry about any dealer mark-up.

However, the process is considered more tedious as the buyer has to gather and handle all the paperwork associated with the transaction. As such, a first-time buyer might find these administrative processes overwhelming.

If this is your first time buying a car from a direct owner, fret not, as we have listed all the documents you will need to complete for a successful transaction.

Indemnity form for test drive

As a buyer, you should always request a test drive. This allows you to gauge the roadworthiness and handling of the car before you purchase it. Before a test drive can be arranged, an indemnity form should be signed.

This form indemnifies the seller from any liabilities arising from the test drive. It also protects the seller, as you, the buyer, will have to bear all responsibilities for any accidents that might happen during the test drive.

Always remember to get the indemnity form signed before heading out for the test drive.

Signing the sales agreement form

Suppose you, a buyer, are expressing some interest after the test drive. You and the seller will then probably look to discuss the terms of the sale, including the price of the car.

Both parties will need to sign a sales agreement form to ensure the terms of the sale are written down clearly. It should include the agreed selling price of the car, as well as the deposit amount.

Issuing of receipt

The seller should issue a receipt after you have placed a deposit on the vehicle. It prevents potential disagreements as it confirms that the seller has received your deposit.

Sourcing for loan & insurance

Unless you are paying cash in full for the car, you will have to seek out loan options to cover the price of the car. Once your loan has been approved, you will have to notify the seller.

The seller can ask to see the documents as proof of the loan's approval. You are also responsible for obtaining a motor insurance policy under your name, which is required to complete the vehicle ownership transfer at a later date.

ALSO READ: The ultimate guide to car ownership in Singapore

Settling the existing loan in full

If the vehicle is still being financed under the seller, do ensure that all outstanding repayments are settled by the seller before the transfer.

After the existing vehicle loan has been fully paid off, only then will the transfer of ownership be successful.

Transfer of ownership

Once the seller's outstanding car loan has been settled, they can now transfer the vehicle to you, the buyer. To transfer the vehicle's ownership, both parties will need to log in to OneMotoring using their SingPass with 2FA Authentication.

The seller initiates the transfer of ownership through the OneMotoring platform. The buyer then has to accept the transfer on OneMotoring within five working days. Note that a transfer fee levied by LTA will be applicable during the process.

Upon acceptance by the buyer, the transfer process is now completed.

Settling the balance amount

If you, the buyer, do not take out a loan to pay off the vehicle's outstanding balance, you will have to pay the seller in cash or a cheque. When the seller collects payment, he/she should issue another receipt that serves as a confirmation of the balance paid.

Signing the handover form

At this point, the vehicle is now ready to be handed over to you after the ownership transfer has been completed. A handover form should be prepared for this final step.

With this handover form, you, the buyer, will now be responsible for any fines, claims, and summons relating to the vehicle.

And with that, the process of buying a car from a direct owner is now complete!

ALSO READ: Used car buying guide for Singapore: Where to buy and what to check

This article was first published in Motorist.