Buying and Selling a Used Car in Panama
Information on how to buy or sell a used car in Panama, with details on insurance, as well as other necessary documents...
A used car in Panama can be bought directly from the owner, as well as from used and new car dealerships. Owners sometimes post advertisements directly on the car itself and there are also websites where owners advertise their used cars:
Buying a used car directly from the owner is usually less expensive than purchasing through a dealership. When buying a car from a used car dealership, it is advisable to visit several to find out standard prices and what deals are available. When paying for a car in cash from a dealership, the car dealership deals with the paperwork. When paying for a car in cash from a private seller, the new owner must transfer the car's title.
The buyer must check that there are no outstanding warrants, traffic tickets or liens on a car. In Panama these remain with the car, meaning that a new owner assumes responsibility for any payments that are outstanding.
In addition, the buyer should ensure that the car is insured and that the insurance policy meets the minimum requirements of the Autoridad de Tránsito y Transporte Terrestre (ATTT). Insurance must cover damage to third parties.
Buying a used car with a bank loan
When purchasing a used car with a bank loan, the buyer has to provide a cash deposit, which reserves the car while the paperwork is completed. A roadworthiness test should be carried out, which entails a mechanic checking to see that the lights work. Nothing under the bonnet is tested.
Before finding a used car to purchase, a buyer should get advanced bank approval for a car loan, as the process can take weeks. The general price range for the type of car required should be researched and a loan for that amount applied for.
After the bank approves the car loan, the buyer is given a loan approval notice, which should be taken to the car dealership who will then release a proposal, or propuesta, which details the following information relating to the car:
- VIN number
- Cost of car
- Tax information
- Vehicle's description
- License number
- Closing fees, if any
The propuesta should be taken back to the bank to be notarised. The bank then transfers the agreed amount to the dealership to buy the car and files a lien on the car, essentially transferring the car's title to the bank until such time as the loan is paid off.
When purchasing a car from a private vendor using a bank loan, the buyer should either speak Spanish fluently, or be accompanied by a Panamanian. It is not advisable for a foreigner who does not speak fluent Spanish to buy a car in this way, as there is a lot of paperwork which can be hard to understand.
Insurance for used cars
Used cars usually come with insurance. If this is the case, as soon as the vehicle's title has been transferred the buyer should contact the insurance company to request that the insurance policy be transferred to their name.
It is advisable to have a used car checked for roadworthiness by an authorized mechanic, preferably one known to the buyer, or who is referred by a friend. It is very important to thoroughly inspect a used car before purchase as they are sold "as is" in Panama.
Selling a used car
When selling a used car to a dealership, the following documents are required:
- Car's title
- Car's registration
- Proof of insurance
The dealership helps in transferring the car's title. If a seller then plans on buying another car, a trade-in is usually an option.
Transferring a car's title involves a lot of paperwork. Buying a car through a used car dealership removes this process as the paperwork is completed by the dealership.
When purchasing a used car from a private vendor, both parties should go to the same municipal office or Municipio that originally issued the car's current license plate, and fill out a transfer card, or Traspaso.
The following documents will be required:
- Copy of the seller's ID
- Copy of the new owner's ID
- Transfer card (Traspaso), which is provided by the municipality, signed by both parties
- Certificate of vehicle inspection for the current year (Inspección Vehicular)
- Certificate of sole title of the vehicle (Registro Unico de Propiedad Vehicular)
- Paz y Salvo from the seller's municipal office, which declares that there are no outstanding tickets or dues on the car. This can be done online at PanamáTrimata
- Receipt of payment of the road tax (impuesto de circulación vehicular) from the municipal office that issued the license plate