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USjunkCars Blog

What Type of Payment Should I Accept When Selling My Car?

The “For Sale” sign you put on your car or an online advertisement can attract many buyers seeking a good deal or who otherwise might want to avoid a dealership. Before you announce your ride for sale, you should decide what type of payment should you accept when selling your car. This question becomes especially important because your announcement could attract those intent on those with fraudulent or criminal designs.

Can a Cashier's Check Bounce?

Your customer’s bank, rather than the customer’s account, stands responsible for your payment. Thus, a cashiers check for a car should not bounce for insufficient funds.

This doesn’t fully answer is it safe to accept a cashier's check when selling a car. The security of a cashier’s check assumes that the check is legitimate. With computers, wireless devices, check-printing apps and laser printers, scammers have tools with which to perpetrate fraudulent schemes aimed at obtaining a vehicle for free or collecting money at your expense.

is it ok to accept cash when selling a car

Marks of a Bad Check

Fake Bank Names. Fake cashier’s checks may have non-existent banks or misspellings in the name of an otherwise existing bank. To catch fictitious names, perform an online search of the name listed as the issuing bank of the check -- especially if you don’t have a local or regional branch of the purported bank. If the name appears to be valid, examine the routing number.

This consists of nine digits in the lower left-hand corner of the check that identifies the particular bank. To get verification of the routing number or bank name, take the check to the bank that issued it.

The “Remitter” of the check represents the party that requested it. A fake cashier’s check may list a requesting party of which the issuer has no record of the check being requested.

No Change Given. Fraud artists may use a cashier’s check to get extra money along with your car. In these scams, the buyer gives you a seemingly valid cashier’s check written for more than the purchase price. Ostensibly, the customer wants the extra money to pay for transport or shipping charges or just needs the extra funds.

At the outset, your bank will pay you the money. You keep the purchase price and the buyer pockets the extra change. When the bank concludes that the check is phony, it will seek the money from you because you presented the check for payment.

Provide in your announcement the price or whether it is negotiable. When it’s time to close, make sure you provide a final amount that includes any registration or title fees that you want the buyer to pay. Prepare a bill of sale or contract that explicitly states these details so that your buyer will know the exact amount for the cashier’s check.

can a cashier's check bounce

Not Real or Serious Purchasers. Beware of people from distant places or even overseas posing as purchasers. Your car with a left-side steering wheel will likely not serve the needs of motorists in Great Britain or other countries who have right-side steering wheels.

You may rightfully suspect a check from a customer who lives in countries with limited roads or reasons to need a vehicle. Notice whether the response to the ad misidentifies the vehicle. Legitimate buyers normally would not send you payment immediately in response to the advertisement.

To help you know if is it safe to accept a cashier's check when selling a car, the Office of the Comptroller of the Currency, a federal agency, maintains a registry of fake cashier’s checks and other check fraud reported by banks. That these banks have alerted federal authorities suggest that scammers are targeting many car sellers or others in addition to you.

Collecting Cash

Selling a car privately for cash eliminates many of the uncertainties that come with accepting even cash or certified checks. When you accept a cashier’s check, the money that you get from the bank is conditional upon the bank ultimately considering it legitimate. When you receive cash from the customer, that money is yours. Payment by cash closes a transaction quicker than the use of a cashier’s check.

Is it OK to Accept Cash When Selling a Car?

No law prohibits you from receiving cash payments for a car.

However, the receipt by you of more than $10,000 in cash may trigger certain reporting requirements. If you deposit $10,000 in cash with your bank, the Internal Revenue Service requires your bank to report it. Under the federal Bank Secrecy Act, banks must report the identity of those who deposit or withdraw more than $10,000 in cash from a bank.

Such a law has as its aim the prevention of money laundering, in which a person attempts to hide the fruits of illegal activity by having often a person or company pose as a buyer spending money on legitimate transactions such as buying a car.

That the bank may report your deposit to the IRS doesn’t raise any presumption that you have participated in illegal activity. However, it means that you need to report it on your income taxes, especially if you sold it for more than you paid for it. Not reporting the gains from a sale on your return when your bank reports your deposit of the money could subject you to an audit, penalties for under reporting or underpaying taxes and perhaps prosecution.

When Are Cash Transactions Not Safe?

Cash is very reliable, but not risk-free.

Counterfeiters, especially the more sophisticated ones, may pass fake cash in their drive to get a free car. You likely won’t discover the counterfeit nature until you deposit the money or spend and someone detects the counterfeit nature. As some measure of protection, ask the buyer to meet you at his or her bank to withdraw the cash. Chances are that at least some of the bills have undergone examination for marks of being counterfeit.

You must also consider personal safety. A buyer promising cash could have criminal plans. To that end, avoid secluded or remote locations. Using your home to close a cash sale invites a potential criminal to see what jewelry, electronics or other property he or she can steal.

Meet at a safe place such as a bank or motor vehicle agency or office. If you use a bank, you can have the buyer withdraw the money there and have any title documents notarized by a bank employee. At a motor vehicle agency, you can also accomplish the transfer of title and registration along with payment. Other safe alternatives include public places or the parking lot of a law enforcement officer.

is it safe to accept a cashier's check when selling a car

Final Thoughts

Regardless of the answer to what type of payment should i accept when selling my car, thoroughly vetting and knowing your buyer and documenting the sale can help you avoid a scam or mitigate any harm if you become a victim. This means having a name, phone number and physical address of the buyer.

If you get only a post office box rather than a physical address, your scammer becomes harder, if not impossible, to locate.

Include this information on the bill of sale along with the price, the description of the vehicle (by Vehicle Identification Number, make, year, model and color) Note on your bill of sale or receipt the exact amount, the date and time, method and location of payment. Keep a copy for yourself.

These items of information can aid you in pursuing legal action or criminal prosecution against the fraudulent or nonperforming buyer that hands you a bad cashier’s check. You may need to document the transaction in case one of your bills is flagged as counterfeit. Finally, do not rush into completing the sale. If the buyer will not let you verify all is legitimate, then seek another buyer.