Laws for selling your car in the UAE

Laws for selling your car in the UAE

So you want to sell your car? Play by the rules and it’ll be a walk around the park!

1. What are the laws around selling a car in the UAE?

This seems to be the common question when it comes to selling your car in country: “What are the rules around this?” We are here to help you see the rules with clarity!

a. Do not put any signs, adverts or sales literature/stickers on the inside of your car windows stating it is for sale. Of course you have seen it in practice in Europe and around the world, but it is illegal here in the UAE and can result in the police impounding your vehicle.

b. When preparing your car for sale, do not wash it in the street. You could incur a fine of AED 100.

c. You cannot sell a car in the UAE with any outstanding finance (mortgage). This will have to be cleared in FULL before the car can be sold.

Little rules that make a big difference!

2. What the bank, RTA and buyer need

a. The seller needs to clear any outstanding finance (mortgage/loan). If they have cleared the finance (mortgage/loan) then their bank must inform the RTA to clear the loan from the RTA system. The RTA will send a SMS text message to vehicle owner when the loan is clear on the RTA system. This usually takes 24-48 hours.

b. It is best for the seller to put their car through the RTA test ahead of advertising. This way they can see if there are any problems and rectify them ahead of a sale because a car cannot be transferred to the new owner without a valid test certificate. The cost is AED 120. The certificate is valid for 30 days so it can be used at the point of transfer.

Not only will this be a good selling feature, it will also speed things up during registration.

c. The seller must be present at the point of transfer and will need their UAE driving licence or Emirates ID (original not copy) plus a valid test certificate.

d. It is also useful to check any fines before selling a car to save any shocks at the point of transfer. You can do this through the excellent Dubai Police App (both on IOS and Android) and also the Dubai Police website.

The buyer needs the following:

– Valid insurance for the car.
– Passport with residence visa (if this is first registration of a car).
– Emirates ID.
– UAE driving licence.
– The buyer needs copies of all of the above as well as originals.

e. It is common for the buyer to pay for (or refund the seller if they have already paid) the cost of the vehicle test (120 AED). The buyer also pays all registration fees (330 AED).

Please note:
If a buyer has a visa from a different emirate to the emirate they want to register the car it is possible to register the car providing you live there and own a property or rent a property.

For example, if you want to register a car in Dubai (and you live in Dubai) but have a Fujairah visa you need to bring a copy of your title deed (if you own the property) or your tenancy contract along with a current DEWA bill in your name.

3. Who can sell my car for me?

The seller has to be personally present at the RTA to transfer a car but there are a couple of options for a third party to sell on their behalf.

You can grant an individual power of attorney to act on your behalf. You will need to get this organized through the courts but it is time consuming. Also, this power of attorney will be for all of your affairs so it goes beyond just the power to sell your vehicle.

The easier way is to visit a car showroom that is authorized to write sales agreements. The owner of the vehicle must be present with their original ID but this will allow them to give authority to an individual to sell the car on their behalf. This is useful if someone travels frequently or is going out of the country for a long period.

Please note that the car must be clear of any finance (mortgage) before you arrange the sales agreement.

Also at this point any fines should be cleared.

Note: Please make sure it is a trusted person or company that you give the sales agreement to, as they will legally be able to sell the car and receive the proceeds. It is been recommended to draft a letter stating that you give this person permission to sell the car on your behalf but the proceeds remain yours.

Some car showrooms will advertise and sell your vehicle on your behalf for a commission and also consultants such as Expat Wheels.

4. Insurance transfer – how do you do it?

If an insurance policy has 7 months or more remaining, you can transfer the policy. Insurance can be transferred to a new person provided they meet the required criteria of the insurance company.
Not all insurance companies offer the ability to transfer insurance so please check with the company first.

If a policy has at least 7 months remaining you can also cancel the policy and get a refund on any remaining period. This is usually a preferred option rather then transferring the insurance.

Please note: To cancel a policy the insurance company will require proof that the car has been sold so take a copy of the new registration card from the new car owner.

5. Loan transfer: Is it possible?

Loan transfer is not possible. The existing loan must be cleared in full and released at the RTA before a new loan can be issued against the car.

6. Selling a car with a loan: How does it work?

If there is an outstanding loan on a vehicle and the seller is not in a financial position to clear the loan it is still possible to sell the car. The best way is for the buyer to go with the seller to their bank and pay the outstanding finance in full and close the account. You will need to prepare a sales agreement letter stating the buyer is clearing the finance and both parties must sign.

If the finance is more than the agreed sale price then the seller will make up the shortfall at that point.
If the finance is less, the buyer still gives the total sale amount to the seller.

The bank should be then instructed to contact the RTA to release the loan on the RTA system. This usually takes 24-48 hours. The vehicle owner will receive a text message from the RTA when the vehicle has been released from the RTA system.

After leaving the bank it is best that the vehicle is left in a secure location and the buyer holds all keys and vehicle documentation until the seller receives the release message from the RTA. The buyer and seller can then go to the RTA and transfer the car ownership as normal.

Now that you know how to handle the rules, how to confidently tackle paper works, how to deal with banks, they can help you stay on the right side of the law and make an otherwise intimidating process easier than you feared!

Let us know in the comments below if we missed out on something, or if there is any specifics you would want us to elaborate on. You never know – we might come up with a full-blown blog post for that! Until then, ciao!

Inspired?

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Look through our many used car ads to find something that fits your needs!

 

  • afaq

    two points are missing
    1- if the buyer’s visa is from other emirate e.g. ajman, and he lives in ajman as well but want to buy a car from dubai.
    2- if the car is currently not under finance, but the buyer wants to buy it on finance.

  • Aatif Shafiq

    I going back to my home country after cancelling my visa. but I have one car under my name. Please advise, can I sell/transfer after my visa cancellation?

  • Mj

    I am selling my new car 1 year driven which has outstanding .but my mulkiya is expiring next day. Buyer is ready to buy and he need to apply for the finances from same bank at least it will take 10 days…at this stage .since I have 1 month grace Priod. Do I need to renew my mulkiya for selling my car or with in grace Priod I can sell. Also in case I renewed it on my name ..does I can transfer the insurance to new buyer name. Can someone please give me the idiea how can sell it.

  • Jeff

    Very well written and detailed post. Still relevant after so many years.

  • Ralph Logan

    Do you need an urgent financial solution for a finance to grow your business. We offer all kinds of finance for easy payments. Contact us now with amount and duration/ years you can payback at email:ralphlogan063@yahoo.com

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