There's a good chance that if you have a car long enough, you're going to want to trade it in for a new one. That means you're either going to have to literally trade your car or sell it. When it comes to selling it, there are a few things you need to consider if you want the transaction to go ahead with as few problems as possible. One of the biggest things that not a lot of people consider beforehand is the best form of payment when selling a car.
We live in a world where you can buy things with cash, check, money order, credit cards, PayPal, Venmo, CashApp, Apple Pay, Google pay, Bitcoin and probably a few dozen others. Not all payment methods are created equally by any means. And when it comes to selling a car, something that could be worth well over $10,000, you want to make sure you're using the best and most secure form of payment available.
The Two Best Forms of Payment When Selling a Car
There's no need to beat around the bush. The best form of payment that you can accept when selling a car is either a bank draft or cold, hard cash. This is the most reliable way to conduct a transaction when it's done face to face with your buyer. Sure, there's always a chance that you're getting passed counterfeit bills, but that's pretty slim in the real world. And a bank draft is as good as cash. Question is, why is this the best way to sell a car?
- Cash is Hassle-Free. When you bring your car to a seller and they hand you cash you can count it right then and there and see that you have the agreed-upon amount. There's never a question about whether or not a payment is going to go through. That's why, even after all these years, cash is king.
This is the reason that Cash Cars Buyer conducts business the way we do. We don't want you to have to wait for a check to clear, or experience any of the stress that comes with wondering if it's going to clear or not. Likewise, we don't need you to download any apps to accept funds, or wait for money to transfer over, or pay any fees that might be associated with these electronic payment platforms either.
If you're ever nervous about conducting a major transaction for cash, then you could arrange to have the deal done at a financial institution where your buyer can withdraw the funds from the bank while you were there in person and hand it over. This adds some security and peace of mind to the whole deal.
- A Bank Draft is Equally Hassle-Free. A bank draft looks like a check, but the funds are guaranteed. The person buying your car will have to go to their bank and have them withdraw funds from their account, transferred into an account owned by the bank, and issue a draft for the amount in your name. It's basically a check that's been guaranteed by the financial institution issuing it. There is no room for doubt here.
Payment Methods You May Want to Avoid
As we mentioned, there are a host of potential payment methods that a buyer could offer and you could accept for selling a car. Let's take a look at some of them and their reliability.
- Personal Check: This is a payment that you want to avoid at all costs. A personal check could easily be cancelled after you accept it as payment and your buyer has possession of your car. Likewise, you can cash the check and then find out from your bank days later that there was not enough money in the issuing account and the check bounces. Obviously, you have some legal recourse to deal with this, but it's going to be an extreme hassle and waste of time. Your best bet is to avoid this all together and simply not take a personal check in the first place.
- Cashier's Check: This is similar to a bank draft. Like a bank draft it is guaranteed by the bank, so the funds come from them rather than your buyer’s account. The difference between this and a bank draft is that a bank will set the funds aside until the draft is used. With a cashier's check the bank takes the funds right away. It's usually a secure option but there have been cases of people forging cashier's checks and banks not catching them until later.
- Certified Check: A certified check has been certified by the bank that has issued it. This means that your buyer has gone to the bank and someone at the bank has checked to make sure that they have funds in their account to cover the check before it's been issued. The idea here is that this is going to prevent you from having to worry about the check bouncing. It's possible that between the time the check was issued and when you cash it that those funds will no longer be there. Some banks will hold the funds until the check is cashed but not every bank will.
- Wire Transfer: Wire transfer fraud has been a problem for financial institutions for years now. Although there can be legitimate wire transfers and they even were considered fairly secure once upon a time, the prevalence of online banking and the anonymity of those conducting wire frauds has made them a dangerous game.
- PayPal: If you have a PayPal account you could accept a payment for a car this way, but it does contain risks. For one, cars are not covered under PayPal buyer or seller protection. That means if there is a problem after the payment goes through and the buyer put some kind of a hold on it, or perhaps they pay the deposit and don't continue with the transaction, PayPal won't cover you through their protection processes like they would for other transactions.
It's also possible that your buyer could have PayPal initiate a chargeback for whatever reason they choose, perhaps claiming that you defrauded them, and you would have to potentially go through some legal recourse to get your money.
The last thing to consider when it comes to accepting money through PayPal is that PayPal always takes a percentage of a business transaction. So, depending on how the payment is processed, PayPal will get a cut of your final sale price, so you'll end up getting less money than you wanted in the first place.
- Venmo: Venmo has become a very popular method of transferring funds online in the last couple of years. However, Venmo offers no fraud protection. It's dangerous for a seller or buyer to engage in any big transactions by using Venmo. For that reason, it's best to avoid it when it comes to trying to sell your car.
- Payment Plans: This could take a number of forms, but the basic idea is the same. It's when your buyer wants to pay you in instalments rather than one lump sum. While this may be fine for car dealerships, for a private sale you should absolutely never do this. The more chances someone has to not pay you the money they owe you, the worse off you're going to be. You're not running a business, you're just selling one car, one time. Get all your money up front.
- Other Electronic Payment Methods: If a buyer wants to pay you using something like Apple pay, Samsung pay, Google pay and so on you would do well to avoid these payment methods as well. Could they be secure? Absolutely. But if you do a little bit of Googling, you'll see that people have experienced fraud, or attempted fraud, relating to sales and buyers trying to use these methods.
The fact is that many of these payment methods are relatively new to most people. In fact, you probably haven't even heard of all of these payment methods we've mentioned before. So never feel pressured to you some kind of payment method you're not comfortable using just because the buyer wants to use it. The temptation to agree to a buyer's terms so that you get cash in hand is very strong. But a buyer knows that as well, especially if they're trying to scam you. If they are legitimate buyers, then they should be comfortable using a legitimate form of payment that you are also comfortable using.
The Bottom Line
At the end of the day how you choose to sell your car is always up to you. If it's a buyer you know and trust, then you probably have no reason to not accept any potential payment method they might offer. However, if this is just a straight business transaction with a stranger it's always in your best interest to protect yourself. If the seller is in town and can meet you in person that's the best way to conduct a transaction. You'll never have to doubt what you got paid when they give you a bank draft or cash in hand. That's why when you sell your junk car to Cash Cars Buyer, we offer you cash in hand, on the spot. It's the best form of payment when selling a car.