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The Process of Buying a Car in Kenya

Purchasing a vehicle in Kenya, whether new or second-hand, is an exciting but complex process that requires careful consideration of legal, financial, and procedural aspects. This guide provides a detailed step-by-step procedure to ensure a smooth, transparent, and legally compliant transaction. It is designed to protect buyers from potential pitfalls such as fraud, hidden debts, or non-compliance with regulatory requirements.

Step 1: Determine Your Budget and Needs

Before embarking on the purchase process, define your budget and the type of vehicle that suits your needs. Consider factors such as:

  1. New vs. Used: New cars come with warranties but are more expensive, while used cars are more affordable but require thorough checks.
  2. Financing Options: Decide whether you will pay in cash, seek a loan, or opt for a hire-purchase arrangement.
  3. Intended Use: Whether the car is for personal use, commercial purposes, or off-road driving will influence your choice.

Tip: If opting for financing, ensure you understand the terms of the loan or hire-purchase agreement, including interest rates, repayment periods, and ownership transfer clauses. Engage a lawyer to review the contract if necessary.

Step 2: Research and Identify the Vehicle

Once your budget and needs are clear, research available options:

  1. For New Cars: Visit authorized dealerships or manufacturers’ showrooms.
  2. For Used Cars: Explore local car bazaars, private sellers, or online platforms like Cheki Kenya or Jiji.
  3. For Imported Cars: Consider importing directly from countries like Japan, the UK, or Dubai through reputable agents. Ensure compliance with the Kenya Bureau of Standards (KEBS) regulation that prohibits importing vehicles older than eight years from the year of manufacture.

Tip: When importing, verify that the car meets KEBS standards (e.g., right-hand drive, roadworthiness) and that the seller provides a pre-shipment inspection certificate from a KEBS-approved agent.

Step 3: Conduct Due Diligence on the Vehicle

Due diligence is critical, especially for used or imported cars, to avoid purchasing stolen vehicles, cars with liens, or those in poor condition. Key checks include:

a. Ownership Verification:

Request a copy of the vehicle’s logbook (Certificate of Registration) from the seller.

Conduct an online search on the National Transport and Safety Authority (NTSA) Transport Integrated Management System (TIMS) portal (tims.ntsa.go.ke) to confirm the registered owner. The search costs KES 550.

Verify the logbook details against the NTSA search results, including the chassis number, engine number, and any co-ownership (e.g., by banks or financial institutions).

b. Debt or Lien Check:

The NTSA search will reveal if the vehicle has a lien, such as a loan from a bank or microfinance institution. If a lien exists, ensure the seller provides written confirmation from the financier that the debt has been cleared.

c. Vehicle History:

Check for any history of theft, accidents, or illegal use through the NTSA portal or by consulting the Directorate of Criminal Investigations (DCI) if you suspect foul play.

For imported cars, request the auction sheet or export certificate to verify mileage and condition.

d. Physical Inspection:

Hire a qualified mechanic to inspect the vehicle’s mechanical condition, including the engine, transmission, brakes, and suspension.

Take the car for a test drive to assess its performance and identify any hidden issues.

Tip: Avoid purchasing a vehicle without a logbook or with a duplicate logbook unless the seller provides a valid explanation (e.g., loss of the original) and an affidavit to support it. Duplicate logbooks can signal potential fraud.

Step 4: Negotiate the Price and Terms

Once satisfied with the vehicle’s condition and history, negotiate the price with the seller. For used cars, consider factors like mileage, age, and condition when bargaining. For new cars, ask about warranties, after-sales service, and any discounts.

Tip: Document all agreed terms in writing, including the purchase price, payment method, and any additional promises (e.g., repairs or accessories). This can serve as evidence in case of disputes.

Step 5: Draft and Sign a Sale Agreement

A written sale agreement is a critical legal document that protects both the buyer and seller. It should include:

  1. Details of the buyer and seller (names, addresses, ID numbers).
  2. Description of the vehicle (make, model, registration number, chassis number, engine number).
  3. Purchase price and payment terms (e.g., deposit, balance, mode of payment).
  4. Date of sale and delivery.
  5. Warranties or guarantees (if any).
  6. Signatures of the buyer, seller, and a witness.

Tip: Engage a lawyer to draft or review the sale agreement to ensure it complies with the Sale of Goods Act (Cap 31) and other relevant laws. This document can be used in court if disputes arise.

Step 6: Make Payment Securely

Payment methods should prioritize security and traceability:

  • Avoid cash payments to minimize the risk of fraud.
  • Use bank transfers, banker’s cheques, or mobile money platforms like M-Pesa for larger amounts.
  • Ensure you receive a receipt or acknowledgment of payment from the seller.

Tip: If paying in installments or through a hire-purchase arrangement, ensure the terms are clearly outlined in the agreement, and retain proof of all payments.

Step 7: Transfer Ownership

Ownership transfer is a crucial step to legally register the vehicle in your name. This process is handled through the NTSA and requires the following:

a. Obtain Transfer Forms:

  • Download the Transfer of Ownership Form (Form C) from the NTSA TIMS portal or obtain it from an NTSA office.
  • Both the buyer and seller must fill out and sign the form.

b. Required Documents:

  • Original Logbook (to be surrendered to NTSA).
  • Copies of the buyer’s and seller’s national ID or passport.
  • Seller’s PIN certificate (for tax purposes).
  • Buyer’s PIN certificate (if required by NTSA).

c. Pay Transfer Fees:

  • Transfer fees vary based on the vehicle’s engine capacity. Confirm the current rates on the NTSA website as they are updated periodically.
  • Pay the fees via M-Pesa or bank deposit through the TIMS portal.

c. Initiate Online Transfer:

  • The seller initiates the transfer process on the NTSA TIMS portal by uploading the required documents and paying the transfer fee.
  • The buyer receives a notification to accept the transfer and complete the process.

d. Collect the New Logbook:

  • Once the transfer is processed (typically within 1-2 weeks), NTSA will issue a new logbook in the buyer’s name.
  • Collect the logbook from the nearest NTSA office, bringing your original ID and the old logbook for surrender.

Tip: If the vehicle is co-owned (e.g., by a bank), ensure the financier’s consent is obtained before the transfer. Failure to do so may result in the transfer being rejected.

Step 8: Insure the Vehicle

It is mandatory under the Traffic Act (Cap 403) for all vehicles on Kenyan roads to have at least a Third-Party Only (TPO) insurance cover. Steps include:

  • Compare insurance providers and policies (e.g., TPO vs. comprehensive cover).
  • Provide the vehicle’s details (registration number, make, model) to the insurer.
  • Pay the premium and obtain the insurance certificate and sticker.
  • Display the sticker on the vehicle as required by law.

Tip: Driving without valid insurance can result in fines, imprisonment, or confiscation of the vehicle. Ensure the insurance is active before driving the car.

Step 9: Verify Registration and Collect the Vehicle

Before taking possession of the vehicle:

  • Confirm that the transfer has been completed and the new logbook is issued in your name.
  • Ensure all agreed repairs or accessories (if any) have been provided by the seller.
  • Collect the vehicle keys, original logbook (if not surrendered), and any other documents (e.g., service records).

Tip: If the seller delays the handover or fails to comply with the agreement, seek legal recourse through a demand letter or by filing a claim in court.

Step 10: Additional Compliance for Imported Vehicles

If the vehicle is imported, additional steps apply:

a. Pay Import Duties and Taxes:

  • Import Duty (up to 25%).
  • Excise Duty (20%-30%, depending on engine capacity).
  • VAT (16%).
  • Import Declaration Fee (3.5%).
  • Railway Development Levy (2%).
  • Confirm current rates with the Kenya Revenue Authority (KRA).

b. Clear the Vehicle at the Port:

  • Work with a licensed clearing agent to process clearance at the port (e.g., Mombasa).
  • Provide supporting documents like the original bill of lading, commercial invoice, and pre-shipment inspection certificate.

c. Register with NTSA:

After clearance, register the vehicle with NTSA to obtain a Kenyan registration number and logbook.

Tip: Engage a reputable clearing agent and ensure all duties are paid to avoid penalties or confiscation by KRA.

Key Considerations

  1. Fraud Prevention: Always verify the seller’s identity and the vehicle’s history to avoid scams or stolen cars.
  2. Consumer Rights: Under the Consumer Protection Act (No. 46 of 2012), buyers are entitled to accurate information about the vehicle and protection against unfair practices.
  3. Warranty and Defects: For new cars, ensure the warranty terms are clear. For used cars, negotiate “as-is” terms carefully.
  4. Dispute Resolution: If issues arise post-purchase, attempt negotiation or mediation first. If unresolved, consider legal action through the courts or the NTSA.