The main difference between physical cash and credit cards for private-party car payments is that cash is relatively low risk and easy to use while credit cards are complex, expensive, and dangerous for sellers. Fortunately, you have a better option.
We’ll discuss cash as a car payment method, why you should skip credit cards, and introduce you to a better way to transfer large amounts of money during a private-party car transaction.
Physical cash has a long history, and people innately feel comfortable with it, especially in smaller amounts. Here are the situations in which cold hard cash excels as a payment method:
Cash is relatively easy to withdraw, hand over, and deposit, making smaller car transactions fairly quick and straightforward
The advantages of physical cash don’t carry over into high-dollar transactions. When a lot of money is on the line, the speed and convenience of cash disappear.
These downsides make physical cash a clunky payment method for car transactions.
Buyers are the ones who want to pay by credit card in car transactions; there’s almost no upside for sellers. Some buyers think they can come out ahead by using a credit card. They might think:
Credit cards don’t follow through on any of these points.
Every step of a credit card transaction is clunky and disappointing for buyers and sellers.
Private sellers usually don’t have the infrastructure to run a buyer’s credit card. Both parties will need to use an intermediary processing solution, such as Stripe. This introduces complexity and cost.
Account creation and sale navigation are time-consuming, frustrating, and aren’t worth the hassle for a one-time transaction.
Credit card processing fees typically run around 3% plus a small fixed fee. Let’s break down what this means for a $60k car transaction using Stripe:
That’s almost $2k lost to fees. A buyer motivated by 1% cashback will be disappointed when the seller insists that the buyer cover Stripe fees. The buyer will end up paying more in fees than they’ll get back in rewards.
A private auto transaction is done “as-is,” meaning that the buyer has the responsibility to do their due diligence and make sure the car is a keeper. Still, some disgruntled buyers try to cause trouble for sellers if they experience mechanical trouble or other issues.
An unhappy buyer can complain to their credit card company, which usually sides with its customer against the seller. While it’s unclear whether the credit card company would be successful at retrieving back the funds, the seller could end up in a long legal battle.
Most sellers avoid credit cards for this reason alone: they want to be done with the sale when they’re done with the car.
A credit card is a bad way to finance a car. Credit card companies charge 15%–30% interest rates on balances carried longer than 30 days.
Let’s run the numbers for someone with decent credit who wants to finance a $20K car. They qualify for a 14% subprime auto loan, and their credit card company charges 24.99% on carried balances.
Putting the $20K purchase on their credit card, the buyer faces two scenarios:
Compare this to the 5-year 14% APR subprime auto loan. They pay a total of $28,457 for the $20k car, coming out more than $7k ahead of the second credit card payment scenario, and more than $50k ahead of the first scenario.
Credit card debt is a poor credit-building strategy that can seriously harm the buyer’s financial health. A car purchase will probably max out their credit limit, increasing your credit utilization ratio. This reduces credit score instead of improving it. The buyer loses the chance to diversify their credit mix with an installment loan.
Whether the buyer pays with physical cash, credit card, or most other methods of payment, they face a catch-22 inherent in private transactions: a trust problem. The buyer wants the title before they pay, and the seller wants the money before they sign over the title. They both want to finish the deal, but neither party wants to fall victim to fraud or crime.
When the stakes are low, this issue is minor. A buyer probably won’t sweat paying for a 2004 Camry, but for a late-model Charger, no buyer wants to slide the money across the table without some form of certainty. And no seller wants to hand over their asset until they’ve been paid.
A bill of sale is a legally binding document that protects both parties. Should either party have ill intentions, the other party has a document that will hold up in court. This generates enough trust for the buyer to hand over payment.
A bill of sale records the transaction terms. Most states have official bills of sale with these fields:
The buyer and seller can print a couple of copies of their state’s official bill of sale (or use a generic template if their state doesn’t provide one). Before exchanging title or money, both parties fill out the documents, sign, and countersign.
However, printed bills of sale have two minor issues:
A digital bill of sale—stored in the cloud, signed and countersigned under both parties’ verified identities—overcomes these issues. Cash and credit cards can’t offer you that. We can.
DealNow allows secure, instant money transfers from the convenience of your mobile device. Enjoy the simplicity of physical cash with the speed of a credit card transaction. We purpose-built DealNow to be the best private-party payment method and much more.
With DealNow, you’re not just getting an alternative to cash or credit card—you’re getting a complete, high-speed, digital platform for smooth, secure car transactions.
We’ve designed the DealNow app to make buying or selling a car as safe and fast as possible. Here’s what a typical transaction looks like:
The entire transaction can be wrapped up in an hour or so on a Sunday evening. If you’re ready to simplify your next auto transaction, you’re ready for DealNow.
Physical cash transactions are largely untraceable once the bills change hands. This lack of traceability makes cash risky for high-value transactions. DealNow provides a secure digital payment solution with a complete transaction record for both parties. Enjoy the safety and legal protection of a digital bill of sale so you can finish the transaction with confidence.
The safest form of payment when buying or selling a car is one that provides security, speed, and verification for both parties. While traditional methods such as physical cash, personal or cashier’s checks, or escrow services are popular, DealNow offers a modern, efficient solution.
DealNow combines the security of escrow with instant digital payments. It verifies buyer and seller identities, provides a secure platform for the transaction, and enables immediate payment upon deal completion. This eliminates risks associated with cash (theft, counterfeit) and checks (bouncing) while avoiding the delays of traditional escrow.
PayPal and credit cards are both fairly safe methods to pay for a car.
If the seller has the ability to run a credit card—and doesn’t insist on charging you extra to cover processing fees—you should be fine.
PayPal has a limit of $60k per transaction, so if the car is under that amount, it’s viable. The seller will get hit with some pretty hefty processing fees, so don’t be surprised if they expect you to cover part or all of them.
If you’d like to skip the extra expense and hassle, use DealNow to pay for that car. It’s so smooth and easy, you’ll never want to pay for a car any other way.
You don’t need an escrow to sell or buy a car. Some people prefer traditional methods such as cash, personal checks, cashier’s checks, credit card payments, or electronic funds transfers. Others may avoid escrow due to its fees and complexity.
The alternatives can be risky. Cash transactions are vulnerable to theft or counterfeiting, skilled forgers make counterfeit checks, and electronic transfers require the seller to disclose sensitive bank account information to a stranger.
DealNow combines the security of escrow with the speed of digital transactions, all without fees. It’s designed to make secure, private-party vehicle sales accessible to everyone.
Cash money might not be the best method of payment, but it’s better than many others. Here are some payment types to avoid:
Physical money or wire transfer is better than the above methods for a large transaction, but they’re still inconvenient, slow, or risky. DealNow lets the buyer send instant digital cash to the seller.
DealNow is the easiest way to close your own vehicle deal, anytime. It’s the safe and simple way to avoid fraud, sign documents, and instantly transact, all in one app.
