How to Sell a Car by Instalments

Sale-Purchase Contract with Payment in Instalments

An installment sale contract refers to an agreement whereby one party transfers the ownership of a particular product to the other party. The counterparty, who acquires the goods, in turn agrees to pay in instalments.

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The essence of the aforementioned agreement is that the party acquiring the goods pays for them within the time specified in the contract. Often this is due to a lack of financial resources at the time of purchase of goods.

In this case, the contract with installment payment can be concluded by agreement between the two Counterparties, or with the involvement of a bank as a third party to the agreement.

The subjects of the contract of sale with installment payment can be both individuals and legal entities. The parties to the transaction are the Seller and the Buyer.

Such an agreement implies a written formulation. If the goods to be purchased are sold in a store, that organization probably already has its own standard samples of a document.

When executing a transaction between individuals, for example, under a contract of sale with installment payment of an apartment or a car, the parties draw up the document themselves, or can use the services of a notary. Below, on the example of a contract for the sale of a car with installment payment, we will consider how to make up this document, and what provisions should be made in this type of agreement.


Contract for the purchase and sale of a car with installment payment.

October 11, 2023 We are: Kiselev Edgar Albertovich, born 07.01.2000, residing at 30, Blucher Street, apartment 144, address Kurgan region, Kurgan, Passport ХХХХ ХХХХХХ, issued by the Department of Federal Migration Service of Russia in Kurgan city on 07.01.2020, hereinafter referred to as the Seller from one side and Zhdanov Vyacheslav Alexandrovich, 07. 02.02.2000 year of birth living in the Kurgan region, the city of Kurgan, street Karimova, the house 76, apartment 245, the passport ХХХХХХХХ, issued by Department of Federal Migration Service of Russia in the Kurgan city on 07.02.2020, hereinafter referred to as the Buyer from the other party have concluded the present contract on the following:

In the preamble of the document the following information appears:

  • type of the transaction to be concluded;
  • Place and date of conclusion of the agreement;
  • names and roles of the parties to the agreement;
  • residence addresses and passport details of the Counterparties.

It should be noted that the entry into legal force of the agreement directly depends on the content of all the essential terms in it. In our case essential conditions are:

  • subject of the contract;
  • cost of alienated object;
  • term and periodicity of fixed payments under the contract with payment in installments.

The subject

Information about the subject of the contract appears in the initial paragraphs of the document. In our case the subject will be the alienated car itself. In the section on the subject of the agreement it is necessary to give a comprehensive description of the object being sold. Such characteristics include:

  • the brand of the vehicle;
  • year of manufacture;
  • VIN number;
  • engine displacement;
  • car color;
  • registration number;
  • passport of the vehicle;
  • certificate of registration;
  • other characteristics inherent to the specified vehicle.
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So, the section on the subject of the agreement is as follows:

The seller alienates into the ownership of the Buyer the following vehicle: Volkswagen Passat CC passenger car, box – robot, 2015 issue, body – sedan, configuration – sport, drive – front, PTS – original, previous owners – one owner, mileage – 90 000 km, VIN XXXXXX-XXXXXXXX, engine number 00000000, body number 0000000, engine size 1.8 liters, color silver, registration number ХХХХ ХХХ ХХ, vehicle certificate ХХХХХХ, issued (by whom issued) ХХХ ХХХ ХХХ (date of issue). The Seller undertakes to pay for the vehicle sold in accordance with paragraph 2 of this contract. Seller is the owner of the vehicle on the basis of the certificate of registration of the vehicle in the State Traffic Safety Inspectorate The specified vehicle is not in pledge, is not arrested, does not belong by right of ownership to third parties.

Contract price and payment procedure

This section is the key to the contract for sale-purchase of a car with installment payment. It specifies the information about how and in what amount payments will be made. Also written provisions on the term of this agreement, that is, until when the Buyer agrees to pay the cost of the car.

The value of the vehicle is 1,200,000 (One million two hundred thousand) rubles 00 kopecks. The Buyer shall pay the price of the contract in installments within one year from the date of signing the agreement. The sum of 500,000 (Five hundred thousand) rubles shall be paid by the Buyer at the time of signing the agreement. The sum of 350,000 (Three hundred and fifty thousand) rubles shall be paid by the Buyer on March 11, 2023. The sum of 350,000 (Three hundred fifty thousand) rubles shall be paid by the Buyer on October 10, 2023. Payment shall be made by means of cash transfer.

Rights and obligations of the parties

This section sets out the obligations of the Counterparties under this Agreement. It looks as follows:

Seller has the right to: – Demand proper performance of the Counterparty’s obligations under this agreement. Seller undertakes: – Hand over the vehicle to the Buyer in proper condition. – Hand over to the Buyer all necessary documents for the vehicle. Buyer has the right to: – Demand transfer of ownership of the alienated object from the date of signing this agreement. The Buyer undertakes: – At the time and in the amounts set forth in the agreement, pay a sum of money in favor of the Seller. – To accept the vehicle, which corresponds to the declared characteristics.

Liability of the parties

This section spells out the circumstances, upon the occurrence of which the Counterparties are financially liable:

The parties shall be financially liable if they fail to perform or improperly perform their obligations under this contract. In the event of late payment, the Buyer shall pay a penalty in the amount of 3% for each day overdue.

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The final clauses state the order of transfer of the vehicle, i.e. where and when the vehicle will be handed over. There may also be sections on force majeure situations and the dispute resolution procedure. At the end of the contract, the signatures of the parties are put, and the deal is considered concluded.


The transfer of ownership of the car is carried out by registering the agreement in the bodies of the traffic police.

How to sell a car in instalments without risk

All articles Used car sale: Deal Registration Tips on the sale How to sell a problem car What to do after the sale What price to set Communication with the buyer Find a buyer Used car sale: where to start Preparing the car for sale

The view that profitable to sell your used car in installments is impossible – wrong. To correctly and safely sell your car, you need to adhere to only a few rules.

How to sell your car in instalments without risk


Rules of making a deal to buy – sell a car

Selling a car in installments is not much different from when the cost of “iron horse” is paid in full. We have prepared an algorithm, which will help to avoid risks during sale:

    • Check the documents of both parties to the car (certificate, passport, technical inspection ticket, service book, etc.);
    • drawing up a contract of sale (hereinafter – DKP);
    • entry of new data in the certificate of transaction – the date of the transaction, the signatures of both parties;
    • drawing up an insurance policy for the vehicle;
    • inspection of the vehicle by the traffic police for compliance with the manufacturer’s individual signs;
    • Registration of the car in the State Traffic Police.

    Transfer of the car to the new owner after the sale-purchase transaction in installments includes a few additional items, but in general, the procedure is uniform.

    Obligatory paragraphs of the agreement for selling a car

    Obligatory paragraphs of the contract when selling your car

    Involve a notary in the procedure. His presence will help reduce the risks. When drawing up an ACP agree and include the following points :

      • the obligations of both parties ;
      • the amount of the down payment;
      • the periodicity of payments;
      • the amount of regular payments;
      • payment method;
      • penalties in case of breach of contract;
      • options for settling disputes.

      The last two points are particularly important. If the terms of the contract are violated, they will provide the seller with a winning position.

      Risks of selling a car by installments

      Risks when selling your car by installments.

      It is almost impossible to sell a car by installments and exclude all the risks. There is no guarantee that a person who is already actively using the car, will not have objective or subjective reasons that can prevent timely payments.

      In order not to increase the risks, it is not recommended to transfer the vehicle by general power of attorney without signing a contract – despite the fact that the buyer does not become the rightful owner of the car, it is fraught with big problems:

        • The participant of the transaction does not get in touch, therefore, the fate of the car also becomes unknown. The first thing to do in this case is to declare the car wanted.
        • The new owner of the car refers to financial difficulties, demanding a lower price or refuses to pay any money. It is possible to solve the issue without disputes and threats by adjusting the schedule of payments for the convenience of both parties.
        • After handing over the car, the owner has found defects and insists on changing the terms of the deal. To avoid the risks associated with this, the act of acceptance of the vehicle will help here. It also makes sense to appoint an independent expertise.
        • An accident, after which the buyer refuses to pay the amount. You can safely go to court with this, but if you draw up an insurance policy in advance, the risks can be minimized, and complexities can be avoided.
        • Resale of the car. To exclude the situation, a prohibition on such action should be specified in the ACP before its signing.

        In general, to avoid loopholes in the ACP or do not miss important points, and at the same time reduce the risks, it is recommended to use the help of a lawyer.

        Methods to sell the car by installments

        Selling a car by installments is carried out in one of three ways :

          • Under a receipt on behalf of the buyer on the guaranteed subsequent payment ( with fixing as much personal data as possible ).
          • Drawing up a collateral agreement, where the car serves as a loan.
          • Drawing up a DKP with stipulated conditions of payments.

          These ways of selling used cars are the most common and each has advantages, disadvantages and risks.

          Selling a car against a receipt from the buyer

          The simplicity of the option is the number of documents to be completed. To sell the car you need a receipt, which obliges the buyer to make regular payments. The document contains the data of both parties, information about the car, the conditions and amount of payment, penalties for breach of contract. To transfer the car into the hands of the new owner it is enough to enter his data into the insurance policy. It is also possible to have a power of attorney, which does not need to be notarized.

          Methods to sell your car by installments

          This option is good if there is not enough time to execute documents, or if there are problems with the documents or the car. If a dispute arises, the receipt is presented in court. To cover the rear you can draw up an acceptance certificate of the vehicle. The risks of violating the terms of the ACP are reduced.

          Drawing up a collateral agreement

          This method can not be considered a direct sale of the vehicle. The buyer borrows from the seller an amount equal to the value of the vehicle, then fulfilling the terms of the transaction, returns it in installments. The transaction is possible if the following documents are available:

            • Deed of credit.
            • A Loan Contract, specifying the conditions of the transaction.
            • Pledge contract, when the car is legally pledged, and if the buyer violates the terms the seller has the right to demand the return of the car.

            The last two documents need to be notarized. By going to court, the seller has more advantages and chances of winning.

            Drawing up a contract of sale

            This is the safest way to sell a car for both parties. Characteristic features – the greatest straightforwardness of execution and a high level of legality. Basic document – bill of sale with payment in installments. The difference from the simple bill of sale:

              • The presence of paragraph “The price of the contract and the payment procedure”, containing the conditions and schedule of payment.
              • Additions in the paragraphs “Final provisions” and “Liability of the parties”, concerning the options for disputes, sanctions for late payments and methods of recovery.

              Legal force of the Deed of Covenant shall become effective immediately after the parties sign it. When selling a used car by installments, notarize the document, stating the impossibility of reselling the car until the installments are complete.

              Options for selling used cars

              Variants of selling a used car

              There are three ways to sell a used car:

                • personally ( market , ads , recommendations );
                • with the help of a car dealership;
                • With the help of a bank.

                Salons and banks are in no hurry to conclude small deals, offering other schemes for the sale of the machine. But when selling an expensive used vehicle, if the seller has no desire to constantly monitor the payment of funds, intermediaries will come to the rescue.

                Car dealers, in addition, competently approach the assessment of the car and hold all the necessary pre-sale procedures. To sell the vehicle in this way, gather a complete set of documents. Difficulties can arise if the car is registered to a third party. Intermediaries will refuse to sell the car in this way.

                Methods for making regular payments by the buyer

                The ways of making regular payments by installments

                There are two payment methods: cash and non-cash.

                  • Cash – complicated by the fact that each procedure of acceptance – transfer of funds is accompanied by receipts. But the new owner is always in touch, there is an opportunity to meet in person.
                  • Cashless. Funds will come to a bank account more quickly and at a convenient time for the parties, but the collection of receipts, confirming the transfer, each performs its own.

                  Both methods have advantages and disadvantages, and the choice of the most comfortable way depends on many factors, in particular the availability of free time and location of the parties.

                  How to Sell a Car by Instalments

                  How to sell a car by installments

                  To be sure to protect yourself from fraud or trouble and to protect yourself from certain risks, follow the advice:

                    • Even when selling a car to someone you know, the procedure should be carried out according to the rules . In this case, giving an installment is a good help, but does not exempt the buyer from liability.
                    • To avoid high taxes, the parties often indicate an underestimated value of the car at the conclusion of the DKP, which should not be done. If a dispute arises, the court will be based on actual documents, and prove that the price of the car was higher, it will be extremely impossible.
                    • Specify in the documents that the car is transferred to a third party without the right to further sale until the end of the period of payment.
                    • Consider the risk of a situation in which the new owner will refuse to pay the due amount – an accident or theft of the car. Note that even in these cases, the person who bought the car will still be responsible for meeting their obligations by paying you in full.
                    • Have the car re-registered so that taxes and penalties the new owner won’t have to pay on their own.

                    Based on the above, we conclude that it is advisable to sell the car by installments only in extreme cases, giving preference to the classic scheme.

                    Checking used cars with AutoCode

                    Checking a used car with AutoCode

                    To sell your car quickly and safely and to avoid misunderstandings between buyer and seller, use the checking service “Autocode”. The report includes:

                      • year of manufacture ;
                      • number of owners;
                      • customs history;
                      • mileage of the car;
                      • The vehicle’s involvement in accidents and an indication of more damaged parts;
                      • registration history.

                      You need only VIN, chassis number or registration number of the car to get information. Service will help avoid claims about the condition of the car after its transfer to the new owner. Also, having full information about the car, the seller will protect himself from the claims from the buyer about the allegedly unnoticed damages, if the car becomes a party to the accident.

                      If you are a professional car dealer, use the service unlimited checks cars “Autocode Pro”. “Avtokod Pro allows you to quickly check a large number of cars, add comments to reports, create your own lists of liquid vehicles, quickly compare options, and store data on cars in an organized form.

                      Autocode” service also provides the possibility of an on-site inspection. The procedure is simple – you leave an application, specialists get in touch with you to clarify the details of the inspection. The master leaves at any place convenient for you, inspects the car with devices and gives a professional conclusion. The results of the inspection can also be sent by email.

                      And to finally convince the buyer that you are an honest seller, show him the report with the verification of you as the owner of the car. You can get it through a special service. The check will show if you have any problems with the law, if your passport is valid, and if there are any debts and enforcement proceedings. If there are no problems with either you or the car, the buyer will be full and agree to the deal. View a sample report

                      The answer to the question “if you can sell the car in installments” is unequivocal – yes. But if you use this way to sell the car, to the drawing up of documents should be taken with increased vigilance. If the buyer fails to comply with the terms of the contract, the seller has the right to demand the return of the car. To avoid getting in an unpleasant situation, carefully consider the person who is going to the transaction.

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