When buying a car from a private seller, payment is often the trickiest part of the transaction. The higher the vehicle’s value, the higher the stakes and the more untenable some payment methods become.
If you’re buying a 2003 Corolla for $4,500, just use Venmo. Or physical cash. For a $60k late-model Ford Raptor, Venmo is out. And 60k in bills starts to feel a bit sketchy.
Let’s look at your options for moving money. Then, we’ll introduce a new solution that might be your best friend going forward.
Before exploring individual payment methods, we need to examine why large fund transfers between strangers are so fraught.
During any high-value transaction between strangers, a catch-22 occurs. The buyer wants the item before they pay, and the seller wants the money before they hand over the goods. 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. But the higher the price tag, the more acutely both parties feel their risk exposure and want assurances that they’ll be protected.
Keep this issue in mind as we explore the payment methods available for a vehicle transaction.
A transfer of bills and a handshake. It’s old school and the process is fairly straightforward.
Physical cash is fine for small purchases but gets too risky and inconvenient for large transactions. It’s time-consuming to withdraw a lot of cash from your bank, and it’s time-consuming for the seller to count and verify it. And of course, having a large amount of physical cash on your person makes you a target for robbery.
For large transactions, people choose cashier’s checks because they’re more convenient—and safer—than physical cash.
A cashier’s check is issued by your bank, which guarantees the funds. Sellers trust cashier’s checks because they can’t bounce. But they can be forged, which is why a smart seller will insist on meeting at your bank so that a banker can verify the check is good.
Compared to cash, a cashier’s check is a relatively secure way to pay for a car. But it’s still inconvenient to meet your seller at your bank. It also limits you to doing the deal during banker’s hours.
A bank draft operates similarly to a cashier’s check and has the same advantages and disadvantages.
A wire transfer involves your bank sending funds directly to the seller’s bank. It’s secure, fairly fast, and not as inconvenient as some of the other payment methods. Here’s the process to initiate a wire transfer:
Wire transfers would be even more convenient if you didn’t have to coordinate with your bank to initiate them. Or be beholden to banker’s hours.
And they’d be even safer for you and the seller if you didn’t need to exchange banking info with each other.
Peer-to-peer payment apps aren’t viable for large car transactions. They cap out at lower limits ($2–8k for Venmo, Zelle, and Cash App; $60k for PayPal, which has hefty fees attached). Don’t bother.
Credit cards are a terrible way to pay for a car. If you’re hoping to get cashback rewards, you won’t. Most sellers will balk at incurring Stripe’s fees and will pass them on to you if you insist on paying with a credit card. Processing fees will eat up your rewards, and then some, leaving you in the negative.
And don’t even think of financing a car purchase by taking on credit card debt; the interest rates are horrendous. Get an auto loan—even a subprime one if necessary—before taking on credit card debt.
Cryptocurrency is limitless, uncensored, and fairly low-cost to use. It’s also really hard if you’re not a blockchain pro. If you and the vehicle seller agree to use crypto, here’s the process:
Here are the reasons you may want to steer clear of crypto:
Escrow services solve the catch-22 of trust we explored at the beginning of this article. They act as a neutral third party, holding funds until both the buyer and the seller fulfill their obligations. If you and the seller agree to use an escrow service, here is how it will go:
Though they help buyers and sellers overcome risk exposure, escrow companies are cumbersome because they layer more coordination, time, and expense onto a deal.
We reimagined how to overcome the catch-22 and give you and the seller similar assurances, without the added headache and cost.
A bill of sale is a legal document that memorializes the terms of a transaction and is signed and countersigned by both parties to the transaction. It surmounts the trust problem by assuring the buyer that they would prevail in a court of law if their counterparty absconded with their money without delivering the vehicle.
You can use a paper bill of sale—two copies, one for you and one for the seller—but there are two edge-case vulnerabilities with it:
A digital bill of sale—stored in the cloud, signed and countersigned under both parties’ verified identities—overcomes these vulnerabilities.
DealNow gives you an instant, verified transfer of funds, wrapped in a workflow that overcomes the catch-22 of trust. You and the seller go step by step through an engineered dealflow that is fast, secure, and intuitive. The entire process occurs via the DealNow mobile app and takes moments.
Delays exacerbate the trust issue, which is why we’ve engineered them out of the process. Because the seller receives payment instantly—and because they’ve signed a bill of sale under their actual identity—the deal can conclude on the spot.
DealNow handles any size transaction, with no limits on the amount that can be instantly transferred. It works any time of day, every day of the year. It’s so easy, so smooth, and so safe that you’ll never want to buy a car without it.
The best way to pay for a used car from a private seller is DealNow. Unlike physical cash (which can be counterfeit or stolen) or checks, DealNow facilitates instant, verified transfers of any amount directly between buyer and seller.
Private car sales can be risky. Here’s how to protect yourself:
PayPal caps out at $60,000 per transaction. If you’re asking less than $60K for your car, you’re golden—if you don’t mind the fees.
PayPal charges a 2.9% + $0.30 fee for goods and services. For a $60,000 vehicle, that’s almost $1,800. That’s coming out of someone’s pocket, and most sellers won’t want to take the entire hit. Be prepared to split the cost of funds transfer with them.
Use DealNow to verify the seller’s identity, check the vehicle’s title, complete a digital bill of sale, and transfer funds securely. These features protect you throughout the online buying process.
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.
