Castler Escrow

The Right Way to Buy and Sell Used Vehicles Online

The used vehicles industry in India is a massive market with impressive future growth metrics. In 2020, the market was valued at USD 27 billion and is speculated to grow to USD 50 billion by 2026, according to a report published by Mordor Intelligence. Since the COVID-19 pandemic impacted the economy negatively, the people’s purchase parity has witnessed a fallback. This fallback is bound to contribute to the speculated rise of the used vehicle market in India as people step away from the option of buying a brand new vehicle. At the same time, people short of finances or experiencing a financial crunch may choose to release some non-essential assets, and used vehicles would probably be the first to go.
Amongst increasing digitisation, the purchase-sale and resale markets have established a formidable online presence through different e-commerce sites. Naturally, this has led to a reduction in physical methods of assessing the legitimacy of transacting parties. Since most people now prefer to buy and sell used vehicles online due to greater convenience, they also have to rely on their pesky verification systems. There is no doubt then, that fraud incidents like this one are commonplace.

“Should I Sell My Vehicle?”

In 2021, the Indian automobile industry took a massive hit as people’s profits and savings were impacted due to the COVID-19 pandemic. Generally too, people were not willing to shell out money on non-necessary, high-value goods – and are still not willing. In comparison, provided someone does need a new vehicle, they would prefer a used one due to the reduced price.
Due to surging demand, prices for used vehicles shot up by 10.5% in June 2021, as reported by Business Insider India. A demand-supply ratio tipped in the favour of sellers has contributed to this. If you plan on selling your vehicle, now is the right time to do so, but do evaluate whether it is absolutely necessary for you to let go of an asset that enables your mobility.

What To Keep in Mind While Selling Your Vehicle Online

1. Important Paperwork – While selling your vehicle, you will need to furnish all the original documents that you received when you bought it. The original paperwork is considered “proof of ownership” – this means that the vehicle you are selling is your own and not someone else’s. In-case you have misplaced any of your car papers, you can contact the local Regional Transport Office (RTO) for assistance.
2. Inform Your Car Insurance Company – When you sell a vehicle, it is important to inform your insurance company so that they can update their records.
3. Pay Attention To Your No Claim Bonus – the No Claim Bonus (NCB) is a reward received by the owner of the vehicle for not making any insurance claims. The NCB cannot be transferred across owners, but it can be transferred to another vehicle that you own. To transfer your NCB, you can issue a request letter to the insurance company to preserve your bonus. The company will preserve the NCB for two years, and you need to transfer the bonus to another vehicle within this time frame.
4. A Thorough Car Inspection – before you physically transfer ownership of your vehicle, get it inspected by a car mechanic. It is not only cheating to sell a car with faults without disclosing the faults, but also morally incorrect. Be a good samaritan.

How To Make A Car Resale Transaction Safer

If you plan on buying or selling your car online, you foremost require a way to ensure that your money and car are secure. A digital escrow account is perfect for a car resale transaction because it is able to protect the interest of each individual party involved.
A digital escrow account is a neutral third-party account governed by an agreement that is signed by all the parties involved in a transaction, including the escrow company. The agreement lists the concerns of different parties, and the escrow company makes sure that all the terms are honored in order to maximize the security in a fair and transparent transaction. The escrow account is akin to a vault in which valuables, money, or any other purchase consideration can be stored. (To ensure greater safety, Castler has partnered with leading RBI-licensed banks and certified trusteeship companies to authorise and approve all fund flows.)

Digital Escrow Process for Car Resale

In a car resale transaction, the vehicle and the purchase consideration both can be protected effectively if digital escrow is used. A typical escrow transaction for selling a used vehicle involves the following steps-
Step 1: Buyer and seller get e-KYC’d and form a quick escrow eAgreement.
Step 2: Buyer deposits purchase consideration for the vehicle in escrow.
Step 3: Buyer receives an inspection period and seller delivers the car to the buyer for inspection.
Step 4: The seller initiates transfer of funds from escrow to his/her current account.
Step 5: The buyer approves the transfer according to the agreed terms, and the funds are transferred from escrow instantly to the seller’s account.

What If Something Goes Wrong?*

Things can go wrong on the buyer’s or the seller’s end, even with digital escrow. This is precisely why an eAgreement is created – the agreement includes clauses that protect different parties in-case a dispute arises.
This means different things for different parties. If the buyer is unhappy with the delivered car, and it does not meet the specifications laid out in the agreement, the buyer can raise a dispute. In this case, the buyer’s money will be protected in the escrow account till the dispute is resolved. In the event that the buyer approves the car but does not approve payment to the seller within 3 business days (and goes MIA), the funds are transferred to the seller automatically.
The escrow company follows the direction of all transacting parties while resolving a dispute. This means that parties do not have any veto power to instruct the escrow company – the resolution should be mutually agreed on by all parties. Failure to do so means that the transaction is paused indefinitely till a resolution is arrived at, and any goods or monies deposited in escrow are maintained securely in the account.
(*Note that the rules discussed in this paragraph apply strictly to Castler only. The rules for any other digital escrow company’s dispute resolution policy can be radically different.)

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Source: https://www.mordorintelligence.com/industry-reports/india-used-car-market

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