How do lenders verify the legality of ownership transfer in used car loans?

When it comes to the transfer of used vehicles that are under finance, lenders will request loan transfer paperwork in order to confirm that everything is being done correctly and legally.

Lenders go to great lengths to protect their interests, as well as ensure that both parties involved in the buy-sell transaction are also protected, and this is why the lender requests the documentation.

In most cases, lenders want a copy of the original registration certificate (RC), provided by the seller. Lenders will want a notice of sale signed by both parties, which outlines the conditions of the transfer and acts as a record of the transaction. Also, the lender may ask for a no-objection certificate (NOC) from the seller.

Additionally, lenders frequently want evidence of payment, such as bank transfer receipts or payment acknowledgements to demonstrate the transaction has occurred between the seller and buyer. Lending professionals will also file updated proof of insurance documentation showing the name of the new owner as it is important to ensure insurance coverage during the transfer and afterwards.

Lenders can approve the transfer of the vehicle only after all the requirements from the relevant transport authority have been completed. The requirements indicated above are:

• completing forms,
• submitting documentation,
• paying money, and therefore officially transferring ownership.

It is always a good idea to keep all documentation of the transaction and obtain confirmation from both the lender and the transport authority.