As a car owner who’s about to sell their precious car, it’s only natural to feel a sense of excitement as you sell your car for cash. More often than not, car owners looking to sell their cars often get caught up in the excitement of earning cash for their cars that they fail to recognize that not all potential buyers have good intentions.
Although it may feel good to finally find a private buyer, you also have to consider what form of payment you’re willing to accept. Finding the safest form of payment when selling a car guarantees the security of your transaction and ensures you get your money.
That said, the following are examples of a payment method that is often considered the best form of payment when selling a car:
Direct Cash Payments
Cash is considered by most as the best form of payment when selling a car.
Through cash payments, you are able to transact with almost any potential buyer who wants to buy your car and receive payments directly.
Cash Is King?
Many consider cash the safest form of payment when selling a car. And when you consider cash transactions, there is nothing complicated about them: your buyer hands over the cash in exchange for the title, bill of sale, other essential documents and the keys.
But beyond the actual transaction itself, cash is only safe to a certain extent. There are many different aspects of cash sales that make cash payments unsafe and complicated:
- Risk of Getting Stolen: Depending on your car’s resale value, you’ll most likely receive hundreds or thousands of dollars in cash. Traveling with that amount of money on you is risky as it might get stolen on your way to the bank. In fact, it might even get stolen the moment you hand over the documents to your buyer.
- Use of Counterfeit Money: You risk losing both your money and your car if the buyer uses counterfeit money to buy your car. Since you’re dealing with a private buyer, you may not have the opportunity to test the bills to see if they’re real.
- Hiccups at the Bank: Suppose you arrive safely at the bank to deposit the money into your bank account. If so, you may get the opportunity to make the deposit — but it won’t be that simple. In U.S. banks, the Internal Revenue Service (IRS) is flagged whenever you make a one-time cash deposit exceeding $10,000. This means you may be questioned about the transaction, get audited, or be required to pay additional fees and taxes.
On Cash Payment Plans
In some cases, desperate buyers may approach you about the idea of creating a payment plan that allows them to pay for your car in installments. Whatever the reason may be, never agree to this type of arrangement. As a private seller, any arrangement that requires numerous payments only creates the same number of opportunities for you not to get paid.
Instead, suggest the buyer take out a loan to cover the cost of the vehicle and may their payments in installments to the lender.
Cashier’s Check
Due to the dangers of carrying large sums of money, a potential buyer may opt to pay you with a cashier’s check instead. A cashier’s check is an official bank check released by an issuing bank signed by a cashier or teller where payments are drawn from its own funds.
Cashier’s checks are advantageous when used to cover the cost of large, person-to-person transactions like car sales. They are seen as a safer form of payment over a money order because they are considered guaranteed funds. They also have no upper limit and can prove the buyer’s good standing in the issuing bank.
Should You Accept Personal Checks?
Personal checks are an excellent alternative to cash as a safe form of payment. However, they are not as good as cashier’s checks because the potential for fraud is high. Unlike cashier’s checks, there is no guarantee that the person’s bank account has enough money to cover the check.
When receiving personal checks, do not agree to provide the necessary documents until the cash is in your hands. Wait until the check clears and the bank issues the correct amount of money before you hand over the title to the buyer.
Escrow Service
Another safe way to complete the sale of your car is through escrow. Escrow is a helpful financial instrument wherein payment is deposited into an escrow account managed by a reputable financial institution or legal entity, holding the money until both parties’ contractual obligations are fulfilled.
In a large transaction like a car purchase, an escrow agreement provides an additional layer of security, ensuring both parties are satisfied with the transaction.
How Does Escrow Work For Car Sales?
Escrow is best used in transactions involving large sums of money. For example, when accepting payments for your car, you may instruct the buyer to deposit the money in an escrow account. The service provider then confirms the amount deposited into the account, giving you the go signal to transfer the title. The company then releases the money to you when the buyer confirms they’ve received the complete documents.
Tips Before Working With an Escrow Service
A variation of an escrow agreement is if both parties agree to use an escrow service. An escrow service serves the same functions and purpose but comprises entities other than banks and attorneys. However, be careful when utilizing such services, as many have been found to be far from legitimate operations, which may put your money and your car at risk.
When working with an escrow service, take note of the following tips:
- Research any escrow service suggested by the buyer extensively.
- Check with state regulators to verify the service’s legitimacy.
- Use the Better Business Bureau database to research the company.
- If they have a website, use a search engine to search for it. Never click any links they send your way.
- Above all, if the buyer insists on using the escrow service they’ve suggested, decline the transaction immediately.
Bank or Wire Transfer
Bank and wire transfers are methods of electronic funds transfer from one bank to another. While both differ to some degree, they are both excellent methods of transferring payments from the buyer’s bank account to yours.
Regarding bank and wire transfers, U.S. Laws require banks and other financial companies to report both the sender’s and the recipient’s complete information, especially when their transactions exceed $10,000.
Lastly, utilizing bank and wire transfers may require you to give out your bank information to the buyer. Therefore, only select this payment method when you are comfortable giving out your bank information to strangers.
A Secure Way to Sell Your Car
If you’re looking for a quick and convenient way of selling your car, don’t sell your car for cash. Instead, go with GivemetheVIN. We offer a safe and secure way to sell your vehicle. Here’s how this works:
- Go to GivemetheVIN.com.
- Provide accurate information about your car on the website.
- Receive an instant cash offer.
- We will pick up your car for free when we drop off the check.
Best of all, we guarantee the best value for your car with our price-matching service. We match any offer you get on CARMAX, or you get $100 if we can’t. Contact us today!
