New rules for second-hand car dealers soon; here’s what will change

The proposed rules seek to make the purchase of second-hand cars transparent and hassle-free for buyers by investing more responsibilities with the dealers

second hand cars rules
Under the new rules, the dealer will execute the deal and there will be no link between the old owner and the new owner of the vehicle. Representative photo: iStock

To ensure transparency in the sale of second-hand cars and protect buyers of these vehicles from legal hassles, the Ministry of Road Transport and Highways has proposed a slew of changes to the Central Motor Vehicle Rules, 1989.

Under the proposed rules, dealers of second-hand cars will be considered “owners” of these vehicles as long as the cars are in their possession.

Dealer would be owner

Dealers have to get an authorisation certificate from the state transport department and transfer the vehicle to their name. They have to intimate authorities once the handover formalities for the second-hand vehicle are completed.


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The vehicle owner who is selling the car needs to inform the state RTO about the deal and get the same signed by the dealer.

Under the new rules, the dealer will execute the deal and there will be no link between the old owner and the new owner of the vehicle. The rules empower the dealer to apply for fitness certificate, duplicate registration certificates, NOC and transfer of ownership after getting ownership of the vehicle.

Dealers, however, can only use the vehicles for test drives for prospective clients, maintenance and repair work and cannot drive them on public roads. The new rules mandate dealers to maintain an electronic trip register which would log details of trips undertaken, purpose, driver, time and mileage for every such vehicle in their possession.

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Once a car is sold, it will be the dealer’s responsibility to transfer the ownership to the new owner of the vehicle. Violation of any of these rules will lead to the revocation of licences of the dealer.

Hassle-free purchase 

There have been ample cases where new owners of second-hand vehicles have been pulled up for the crimes and violations committed by previous owners. The new rules seek to eliminate such hiccups and prompt prospective buyers to get their desired car without worrying about legal implications.

The changes in the law would also invest more responsibilities with dealers and make them cautious about transferring ownership on time, and providing the right documentation and challans.

Experts say the proposed rules not only formally recognize intermediaries or dealers – a step that would give a fillip to the used car market – but also take the liability off the owner once they have sold off their car.

Upcoming deadline

While more details about the new rules are yet to be known, reports say the new rules are being framed and may be implemented across the country by the end of the year under the Central Motor Vehicle Rules (CMVR) 1989.

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