The deal is done, but what’s the best way to pay for a second-hand car?
Buying a car and paying for it are two very different steps.
The former relates to deciding you’ve found the right set of wheels, which is exciting, while the latter is handing over your hard-earned cash, which can be frightening.
So, what’s the best way to seal the deal when it’s not a dealership-based transaction?
Please note, this article provides general information only and does not constitute legal advice. carsales is not involved in the monetary transaction between the buyer and the seller of a vehicle.
Bank transfer
The safest and most secure method is to ask the buyer to meet you at the most convenient branch of your bank, and either withdraw the money in cash and give it to them, or have a teller transfer the funds to their nominated account.
This way both the buyer and seller can verify the transaction with a receipt from the bank, and the funds transfer is usually immediate.
Bank cheque
Alternatively, the buyer can go to a branch of their bank and request a bank cheque be drawn up, and made out to the seller for the agreed amount.
This essentially withdraws the money from the buyer’s account and can only be transferred to the seller when they deposit the cheque into their nominated account.
Online transfer
Online banking is quick and easy for everything and everyone these days. However, this can also open up a Pandora’s Box of potential problems for either party involved in the transaction, particularly when large sums of money are concerned.
For starters, the seller may have a daily limit on the amount of money they can transfer from their account, which means the transaction may be protracted – which is not ideal for either party.
Even if that’s not the case, electronic funds transfers may take a few days for the money to land in the seller’s bank account, which could prevent them from handing over the vehicle until they have the cash in hand – even if they have proof of payment through a receipt.
This delay could lead to the buyer skipping town and leaving the seller without a car, and the cash. Or vice-versa, if the buyer has collected the vehicle, they could also cancel the transaction in the interim and leave the seller short.
Online banking is best kept for affordable second-hand vehicles where the buyer can make a single transaction with an immediate transfer of funds. For more expensive vehicles, we recommend either of the processes highlighted above.
Hard cash
Lastly, there is good ol’ hard cash. This will, of course, require the buyer to withdraw it from their bank and deliver it to the seller in person, which puts them at risk of being robbed or simply losing it in transit without any recourse.
The seller will also have to count the cash in person to validate the amount is correct, which can be difficult when dealing with large amounts, and then carry it to deposit in their bank account, which again puts them at risk.
Ultimately the choice is up to you… Just make sure you stay safe and be prepared to ask for or deliver a receipt.
Directly to the lender
If you purchase a car under finance then you may want to pay all or part of the sale price to the lender in order to discharge the loan.
Most lenders should be able to provide written documentation confirming how much is owing. See our Buying a car with finance remaining article for more information. If you have any concerns, consider seeking financial advice.
Disclaimer: This article contains general information only and does not constitute legal advice.
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