Need help for buying an used vehicle

Legally NO.

The best method would be let him talk with his bank where the loan is impending and you clear the loan after obtaining permission letter of arrangement for sale, from him (email) and pay the balance amount into the seller's bank account. Obtain property handover acknowledgment from his agent (even this should be mentioned in the seller's email).  Since the TO forms are available already signed by the seller, you take those forms and present the same to RTO for getting the vehicle transferred on to your name duly submitting NOC of the bank.   The seller should ask his bank to hand over the letter of loan clearance to you.

The vehicle is under loan, hence until the loan amount is fully repaid, the owner will not have rights to sell the same to a third party, therefore, if the owner agrees, you may settle the amount to the lender/bank, get their clearance and then take TO from from the seller, however, the seller has to be in India on the date he signs the TO form or he should have given a POA deed in favor of his agent to sell the car on his behalf after fulfilling the formalities in this regard.

Right now the seller is telling to create a document in stamp paper with points :

1. He will be selling the car to me for an amount of 5.8L

2. He will clear the loan as soon as we pay the amount and get me the NOC within a month

3. the amount will be paid as Cheque depositing to his account.

4. On his behalf the sale will be done by his friend.

This will be signed by a notary and will send to US and he will sign and send it back. As soon as we get the document, I will give money to his friend and he will give me the car.

Since its signed by notary is this will be valid ?

Since the seller is out of India he is beyond reach of Indian laws. Therear emany things to be seen. If the car is not stolen property. You got to check the enginee number and chasis number also.

Once cars credibility tis checked you also have to ensure that person who is selling and his signaturesare same as recorded in RTO records. You need to take ID cards and sigantures prrfs ofseller.

That is nfor genuine ness of the deal

Now coming to transfer, there is already provision in concerned forms prescribed IMV act to get signatures of Hypthecator firm (fianciar) to sign wioth his stamp.  Just have a look at these transferdocuemnts which are easily avaiolbale online serach or your state Transport department  website

You need a POA specifically mention the carnumber model  year of manufacturing  to seel car in his behalf and sign at all required statutory papers facilitating transfer in name of buyer.

I dont know eher your seller lives. The frmnats and stampinmf of POAs in USA or Canada look different than one made in India.

I would stille advsie involves some cardealer with experience of dealing in imported cars or cars belonging to overseas sellers. he maycharge you 2% of value but it is worth it.

Agreed with expert.