Even though their are many people who drive cars in Kenya, most of them do not own the cars fully as they purchased them on loan from a bank or hire-purchase.
Whenever you are purchasing a car, one of the first things that you should enquire about is whether the vehicle is part of an existing loan or not. This is because you may end up losing your money and not getting the papers for the car if the seller defaults to clear the outstanding loan balance.
When it comes to purchasing cars on loan, most car owners prefer to go to banks as they know that they can get favourable terms. In exchange for security, the banks always retain the vehicle's logbook until the loan is cleared.
Below are some of the things that you need to do if you do not want to lose your money when purchasing a car with a bank loan.
1. Write a sales agreement and try to ensure that it highlights the terms of the purchase and who has to take responsibility in case something goes wrong.
2. Ensure that you are aware of the existing loan balance before you make your purchase. You can do this by demanding a loan statement from the bank that is owed.
3. Pay the loan balance in full and demand for the immediate release of the logbook. The logbook may not be released on the same day that you clear the loan as different banks have different procedures. However, you should try your best to get the logbook as soon as possible.
4. Make a joint agreement with the bank and the seller. The agreement should ensure that the seller does not pick up the logbook without the presence of the buyer and that the buyer will not be given another loan with the same vehicle that was purchased as collateral.
Source: Authentic buy and drive.
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