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Expert Buying - How to check car’s documents

Ishaq Nabi
by Ishaq Nabi

20-12-2021

7 min read

Expert buying

One of the biggest impediments to buying a car in Pakistan is checking a car’s documents. Buyers, as well as sellers, are most of the time not aware of the exact documents they need. So, this article is dedicated to answering all queries that might arise in your mind while checking a car’s document.

Before we begin we want to state that car registration, token tax collection and transference fall under the Excise and Taxation department. Every province, including the Capital territory, has an Excise and Taxation department.

While mostly, their processes are the same, they differ slightly. Some have advanced more than others. We will be mentioning the differences where they exist.

So, let’s start with the different documents concerning a car.

Smart card

This is the relatively latest addition to car documents in Pakistan. This has been designed keeping in mind its ability to tackle inside wallets and pockets. It also contains a scannable chip, that might come in handy in process of registration and verification later on. Moreover, unlike the paper files previously used, its material is good enough to withstand a few splashes of water but not too much.

However, not many car owners have smart cards and its provision has been discontinued shortly at different times in some provinces.

Car’s Copy

Many of you will know this passport kind of booklet that contains ownership details about the vehicle. Traditionally this has been in use for a long time in Pakistan but recently with the introduction of Smart cards, owners are ditching these.

This is why we want our readers to know that even if you have acquired a Smart card for your car’s registration, you will still get this copy and it’s still very important. The reason being this contains a record of everyone that has owned the car throughout its lifetime.

Therefore, if you’re careless about the car’s copy and you lose it, you’ll have a tough time selling your car. We will explain the reason later but for not make sure you get this copy when you buy a car and keep it somewhere safe. Usually, it’s attached with the rest of the documents of the car.

Moreover, it contains details of the token taxes paid by the owner.

File documents

What is typically known as file documents of a car in Pakistan include the Sales Certificate of the vehicle, invoice, insurance letter (if insured), Bank’s NOC (if financed), Form F, certificate of registration, and subsequent transfer deeds.

These documents are stored in a folder, on which the car’s registration number is written.

Now that you are aware of what kind of documents exist for car registration, now we can tell you what you need to do when you buy a car. At the end of these, we will also tell you what are the steps you’ll need to take when selling your car.

How to ensure the right documents when buying a car in Pakistan?

Make sure the documents are complete and original

While this seems like a no-brainer, it’s quite common that buyers end up paying the full price while the documents are not complete or original. For this, all the documents mentioned above should be present. Don’t take the seller’s word, make sure you check them yourself.

If it’s a duplicate copy or file, you should be compensated for that. While there’s nothing wrong with duplicate book or file, but a culture exists in Pakistan where such a situation is unwanted. Usually, it’s just a ploy of car dealers to have the price of the seller’s car reduced.

However, if you are losing money when you’re selling a car with duplicate documents, then you have every right to ask for a similar reduction in value when you are buying a car with duplicate documents.

What happens is that most sellers will try to hide such faults in their car’s documents, and it is your responsibility to double-check.

Make sure the chassis no and model are accurate

On all car documents, you will notice basic information like chassis no and model mentioned. Tally them with each other and also with the one mentioned besides the car’s engine. This will ensure that you are getting the right documents and the right car.

What happens is that often buyers report that the car they were sold was not the one on the documents. This is can be a huge issue for the new owner who will have a very difficult time selling this car or even finding the right documents.

Make sure you’re buying from the right owner

In the past decade or so, a new tradition has emerged where car owners do not transfer the car’s ownership to their name and use it on the open letter. The logic they use is that this helps reduce the number of owners on the car, which will eventually prevent the value of the car from following.

We want you to know that not only is this assumption false but this practice is also full of problems. Initially, this practice started from car dealers who claimed that since they are owners of the car for a very short time, they don’t have to transfer the car to their name. However, the practice was adopted by regular people and has corrupted the whole sector.

We warn buyers from falling into this trap, and only buy cars if the person selling to you has their name on the documents. Let’s say you are the fourth owner, you will need a transfer certificate in the name of the third owner. The second and first owner should not concern you. However, if their documents are attached, it’s a plus point.

If the seller has not transferred the car to his/her name, we suggest you avoid such a deal. Also, we suggest you transfer the car to your name and avoid this practice of open letter. It is for your own good.

Make sure all the tokens are paid up to the year of purchase

This is a very commonly missed point but we don’t want you to experience it. As a buyer you should get a car whose token taxes are paid until the year of purchase. If the seller claims he can’t pay, then ask him for equivalent reduction in the cost of the car. Usually car’s have lifetime token taxes paid, which is a plus point in favor of that car.

In case you are very generous and don’t want to debate on minute issues, then keep in mind to not expect the same when you are going to be selling your car. The next buyer has no concern if you let the previous seller go. He/she deserves token taxes paid up till the year of purchase. If you don’t have the time you can offer them an equivalent reduction in the final price.

Pay using a bank draft or cross cheque

The days of paying such huge sums with cash are over. There are several problems with transactions that involve cash. While fake notes are commonly reported, it’s also difficult to handle that kind of money as you can get robbed in such an instance.

Previously people used to avoid putting huge amounts in banks due to the fear of tax authorities. However, now it has become a normal practice and you should pay accordingly. The seller should have no problem with these modes of payment.

What do you need to know when selling your car in Pakistan?

There are some procedures you should ensure when selling your car in Pakistan.

Make sure the buyer transfers the car in his/her name

Just like we’ve discussed the practice of open letter in Pakistan, buyers often do not transfer the car in their name. Previously owners did not have a problem with this but over time, several problems have emerged with this practice. The most common one being that if a crime is committed using the car, it’s the previous owner who will be called to the police station. If you are one such owner, you will have to bear the brunt of the authorities.

Therefore, make sure that the buyer transfers the car in their name. The simplest way to do this is by completing the transfer deed or otherwise known as the T.O. form. You can bring the buyer to a commitment that he/she will transfer the car on their name as soon as possible.

Initiate the transfer process yourself

Some sellers initiate the process of transferring the car on buyers name themselves. Although this is a bit of effort at first but it pays off later. So if you can do this, it’s a good initiative.

Keep photocopies of important documents

This is a very important step of every car transaction. Always make sure you photocopy the transfer deeds or T.O. form that contains your signatures as well as the buyers. Also, keep a crossed photocopy of the buyer’s ID card. This will be your proof for future uses.

What if you’ve completed the transaction but the buyer refuses to transfer the car in their name?

This is a very common issue that happens with car transfers. In this case, you have no other choice but to file a complaint at your local police station. This will prevent you in case there’s any crime reported involving your car.  

Final Words

That’s all we had to say about car’s documents. In case we’ve missed anything or you have a unique query to ask, let us know and we will answer it for you. Hope you have a good time buying your car after reading this article.

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