[Secrets to Buying and Selling Used Cars] Things to Read Before Signing a Contract (Includes Sample Car Purchase and Sale Agreement)

Download the car sales agreement template (click here)

Signing a sales contract is a crucial step in a used car transaction in Hong Kong. To protect the interests of both buyers and sellers, here are some essential pre-signing considerations, from document verification to vehicle inspection, to ensure a more secure transaction.

1. Vehicle Document Verification
1. Vehicle Registration Document (commonly known as "license plate book")
- Confirm whether the seller is the car owner and check whether the owner's name is consistent with the ID card.
- Verify that the vehicle specifications (such as model, engine number, chassis number) listed on the vehicle registration document are consistent with the actual vehicle.
- Check if there are any outstanding transfers of ownership on the vehicle.

2. Vehicle license plate (License Disc)
- Ensure the vehicle's license plate is valid and verify its expiry date.
- Check for any unpaid license fees or fines, which may become an obstacle to transferring the vehicle.

3. Maintenance and repair records - Ask the seller for the vehicle's maintenance and repair records to find out whether the vehicle has undergone regular maintenance and has a history of major repairs.
- If the vehicle has been involved in an accident, confirm the scope of repairs and whether the replaced parts are original parts.

4. Vehicle Inspection Report - Require the seller to provide the latest vehicle inspection report to ensure that the vehicle complies with the safety regulations of the Hong Kong Transport Department.
- If there is no vehicle inspection report, you may consider arranging the vehicle inspection service yourself.

5. Third-party search (vehicle history and legal status)
- Use professional platforms (such as "CarFact" or "HPI Check") to check whether the vehicle has the following conditions:
- Outstanding loans or mortgages.
- Any record of loss or theft.
- Past accident or repair records.

2. Vehicle Condition Inspection
1. Body Inspection - Check the exterior of the vehicle for any visible damage, rust, or signs of repainting.
- Observe the alignment of doors, windows, and rear of the car and avoid buying a vehicle that has been involved in a major accident.

2. Engine and mechanical inspection
- Start the engine and listen for any unusual sounds such as knocking or metallic grinding.
- Check the engine compartment for oil or other fluid leaks.

3. Chassis inspection
- Make sure the chassis has no obvious damage, deformation or rust, especially if the used car is often parked outdoors.

4. Tires and brake systems
- Check whether the tires are evenly worn and whether the tread depth meets safety standards.
- Test the brakes for sensitivity and pay attention to any unusual sounds or vibrations.

5. Interior design and electrical appliances
- Check if the seats, dashboard and air conditioning are functioning properly.
- Test all lights, wipers and audio systems for proper function.

6. Test drive
- Take a test drive before signing the contract to observe the vehicle's handling performance, steering sensitivity and suspension shock absorption.
- Test stability at different driving speeds and note any unusual sounds or vibrations.

3. Contract Notes
1. Clear contract terms
- Confirm that the vehicle information listed on the contract (such as license plate number, model, and vehicle condition description) is correct.
- Detailed information on the vehicle's transaction price, payment method, and delivery date.

2. Warranty
- If the seller promises that the vehicle has a "no accident record" or "no mortgage", this clause must be included in the contract to avoid future disputes.
- If the vehicle is still under warranty, confirm whether the warranty is transferable to the buyer.

3. Unsubscribe or Cancellation Terms
- Confirm the cancellation arrangements if there are any issues with the vehicle or if the transaction cannot be completed, including whether the deposit is refundable.

4. Payment Arrangements
- Avoid using cash when signing contracts. It is recommended to pay by bank transfer or check and keep transaction records.
- If a deposit is required, confirm the amount and conditions, such as if the deposit is non-refundable.

5. Transfer Responsibilities
- Determine who will be responsible for handling the transfer formalities and paying the associated fees (such as vehicle inspection fees, stamp duty).
- Ensure that the seller has paid all fines, license fees and insurance before transferring ownership.

IV. Transfer Procedures
1. Transfer Location
- When handling vehicle transfer procedures at the Hong Kong Transport Department, it is recommended that both the buyer and the seller be present together to avoid information discrepancies or other problems.

2. Insurance Transfer
- Check whether the previous owner's insurance is transferable, or purchase new insurance before retrieving the vehicle.

3. Vehicle delivery
- The vehicle and keys can only be officially delivered after the transfer is completed, and it is confirmed that all relevant documents (such as registration documents, vehicle inspection reports, etc.) have been handed over to the buyer.

Summarize
A used car transaction isn't just about price; it also involves the vehicle's safety and authenticity. Careful document verification, vehicle condition inspection, and clear contract terms can effectively mitigate transaction risks and protect the rights of both parties. If you have questions about any step, it's recommended to consult a professional or lawyer.

Download the car sales agreement template (click here)