Selling your used car? Do keep these things in mind

In an interview to CNBC-TV18, Harshvardhan Roongta, Roongta Securities discussed about points one should remember while selling a used car.

Check out: 3rd party motor insurance vs comprehensive cover Below is the verbatim transcript of Roongta's interview with CNBC-TV18. Q: What should one keep in mind while selling a car? A: The personal finance aspect while selling a car is that when a person is selling a car or a motorcycle, generally he fills in a couple of forms, which are form 29-30 and hands it over to the buyer. It is a perceived notion that all the formalities have now been completed and the headache of getting the car transferred in the name of the buyer is that of the person who has bought it. However, I would say that there are couples of things which a seller needs to keep in mind and follow-up whether those things have been done or not: (1) he needs to get the insurance policy transferred in the name of the buyer and also claim a No Claim Certificate. If a seller has not incurred any claim in the policy, he gets discount in the premiums for that insurance policy. This entitlement of the discount is that of the seller and not of the buyer. Therefore, if a seller is enjoying 50 percent discount on premiums because he has been a person who has not made any claims and not met with an accident; this entitlement can be retained by the seller and used when he buys another vehicle, for example the seller has to approach the insurance company and take a No Claim Bonus (NCB) certificate. This certificate is valid for three years from the date of issuance. If the seller buys another car, for which premium is Rs 25,000, he gets discount of 50 percent on new insurance policy that he buys. So, this is a personal finance aspect which many people do not realise. (2) He needs to inform the Regional Transport Office (RTO) that the car has been sold to a particular person. Many a times the buyers do not transfer the car in their name and they just linger and delay the process. If one sells the car to an agent then this agent waits for a final buyer and then he transfers a car directly into the name of the final buyer. In the interim period it has been driven around and still stands in the name of the seller. If it gets involved in any illegal activities or an accident then the responsibility is completely that of the owner of the car, which in the records of RTO, is the seller as yet. So, these are one-two points which a seller needs to keep in mind and follow-up even after handing over the car in the delivery note to the buyer. However, these are things which will insulate him from all the technical aspects of the law in case the car meets with an accident or gets involved in illegal activity. _PAGEBREAK_ Caller Q: Is it a good idea to invest in companies which normally give high dividends? Can you please give some suggestions for long-term investing? A: Distributing dividend is just one of the parameters in judging the performance of a company. For your knowledge purpose I would like to inform you that there are many companies which are capital intensive in nature and hence do not distribute dividends every year. That does not mean that they are not good; there are growth prospects, there are growth investing and there is dividend investing. I would suggest that for long-term investing the short-term phenomena of rallies after issuance of dividend, after distribution of dividend is not the parameter. Equities as an asset class work the best over a period of seven-ten years. Therefore, you identify companies based on bottomup approach, look at the company, look at the market share that that company enjoys, look at the management and couple of other factors internally within the company and decide which company is good and then invest. My favourite is if you are looking at some recommendations particularly in stocks then my favourite have been fast moving consumer goods (FMCG) for long-term portfolio investments. I look at ITC, Nestle India, Colgate Palmolive, Procter and Gamble Hygiene and Health Care and I do have investments in these companies and also recommend them to my clients. Therefore, look at a bottom up approach, identify a few companies, study the financials of those companies and other aspects and then look at investing into them for a long-term.