• Legal issues in renting out personal vehicle

I want to understand the Legal issues in renting out personal vehicle to a friend for personal use. 

As per the motor bill - 

No owner of a motor vehicle shall use or permit the use of the vehicle as a
transport vehicle for the transport of passengers and their goods in any public
place whether or not such vehicle is actually carrying any passengers save in
accordance with the conditions of a permit issued under this Act.

2. The provisions of sub-section (1) shall not apply:

if it is not carrying any goods or passengers or their goods, any transport
vehicle which is subject to a hire-purchase or lease hypothecation
agreement, and which, owing to the default of the owner, has been taken
possession of by or on behalf of, the person with whom the owner has
entered into such agreement, to enable such transport vehicle to reach the
principal place of business of the financier;

So, it clearly says that one cannot use personal vehicle as a transport vehicle (Yellow number plate), but vehicle can be leased just like people rent out their homes. Currently, does the law clearly say that personal vehicle cannot be rented out for personal use. 

Few more questions that need to be answered: 

What is the exact legal issue when you give your personal vehicle to other people for personal use for money? 
In case of accidents whose liability is it? The owner’s or to whom he has leased the vehicle?
In case of damage to the vehicle or theft, while filing FIR does the registered owner need to be present?
What are the legal implications of a person not sticking to the agreement? If we can some legal documents like his verified ID, rental agreement can a FIR be filed?
Is the current insurance policy valid if a person rents out the vehicle for personal use?
How do we make sure that a person pays back if a vehicle is lost due to negligence?
Is the online rental agreement valid in court of law? How to make it stamp duty?
How does the current car insurance work? Who liability is if a person is dead?
Asked 1 year ago in Civil Law from Mumbai, Maharashtra
1) you cannot rent out your car to your friend for consideration .

2) in case you rent your car you are using it for commercial purposes 

3) you would be liable  as owner of vehicle in case car meets with an accident is not in road worthy condition 

4) in case car is lost owner would have to lodge FIR to claim insurance . 

5)Private Car Package policy is for private use only. Hence any accidental damage or liability caused while the vehicle is being used for any purposes like hire or reward, Carriage of goods, Organized racing, Pace making, Speed testing, Reliability Trials, Use in connection with Motor Trade will not be accepted
Ajay Sethi
Advocate, Mumbai
23097 Answers
1212 Consultations
5.0 on 5.0
Hi, if you want to rent the personal vehicles then you must entered into  an agreement then only it is valid.

Secondly, owner of the vehicles is liable  for the accident provided if he validly assign  the vehicles  to a third party who has valid driving license suppose you have assigned your vehicles to  a third party who don not have valid license then owner of the vehicles is personally responsible for the accident.

Thirdly, owner of the vehicle has to  lodge the complaint for the loss of vehicle.
Pradeep Bharathipura
Advocate, Bangalore
4104 Answers
133 Consultations
4.3 on 5.0
1) get agreement drafted by lawyer for giving your car on rent . 

2) amount of rentals , car deposit have to be specified

3) provision has to be made for termination of agreement in case of failure to pay rent and for taking repossession of vehicle 

4) Any vehicle which is to be used for carrying goods on passengers for Commercial purpose essentially requires the permission (permit) of State Govt. under the provisions of M.V. Act, 1988 and rules framed there under. Permits are issued by State Transport authorities to control and to regulate operation of commercial vehicles.


5) you will have to move court in this regard . police wont intervene
Ajay Sethi
Advocate, Mumbai
23097 Answers
1212 Consultations
5.0 on 5.0
1. You can rent your personal vehicle for the personal use of the third person,

2. The said vehicle can not be rent for commercial use i.e. for transporting passengers and carrying goods,

3. Execute an agreement detailing all conditions for the said act og giving on rent.
Krishna Kishore Ganguly
Advocate, Kolkata
12028 Answers
227 Consultations
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1. Since it is an one time job, I will suggest you to take professional assistance of an experienced lawyer to draft the said Agreement,

2. Since every agreement is unique depending on the present requirements, genaral format of agreement may skip some very important points which the local lawyer may not miss.
Krishna Kishore Ganguly
Advocate, Kolkata
12028 Answers
227 Consultations
5.0 on 5.0

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