Advice
Selling a car: what payment method to accept
You can use bank transfers, cash in hand, cheque or escrow to receive payment when selling your car. Here’s what you need to know about securely transfer funds.
Words by: Andrew Woodhouse
Additional words by: Nimisha Jain
Last updated on 11 December 2024 | 0 min read
Once you’ve negotiated and agreed on a price, the final step when selling your car is receiving payment. So, what is the best way to get paid for your car?
There are a few options - you could take cash in hand when the buyer collects the car, use a bank transfer for a quick and immediate payment, accept a cheque or use an escrow that could take care of receiving money for you. Here are the pros and cons of each method of receiving payment for your car:
There are a few options - you could take cash in hand when the buyer collects the car, use a bank transfer for a quick and immediate payment, accept a cheque or use an escrow that could take care of receiving money for you. Here are the pros and cons of each method of receiving payment for your car:
1. Cash payment
Cash is straightforward, but handling large sums of money requires caution.
If you’re willing to take a cash payment, consider arranging for this to take place at a bank. The staff there can count out the notes and guarantee they’re genuine. You’ll also be able to pay the money in immediately. If the money turns out to be counterfeit, it can be difficult to track down a buyer that’s already driven away with your car. Related: Tips on selling a used car safely. If you don’t hand it over at the bank, make sure you count the money and be careful walking around with large sums of cash. Pros: • Immediate payment with no processing delays. • No need to share sensitive banking information. Cons: • Risk of counterfeit notes. • Carrying large amounts of cash can be unsafe. Tips for safe transactions: • Arrange to meet at a bank so staff can verify the cash and deposit it into your account immediately. • Avoid meeting after business hours or in isolated areas. • Count the money carefully and store it securely until deposited.
If you’re willing to take a cash payment, consider arranging for this to take place at a bank. The staff there can count out the notes and guarantee they’re genuine. You’ll also be able to pay the money in immediately. If the money turns out to be counterfeit, it can be difficult to track down a buyer that’s already driven away with your car. Related: Tips on selling a used car safely. If you don’t hand it over at the bank, make sure you count the money and be careful walking around with large sums of cash. Pros: • Immediate payment with no processing delays. • No need to share sensitive banking information. Cons: • Risk of counterfeit notes. • Carrying large amounts of cash can be unsafe. Tips for safe transactions: • Arrange to meet at a bank so staff can verify the cash and deposit it into your account immediately. • Avoid meeting after business hours or in isolated areas. • Count the money carefully and store it securely until deposited.
2. Bank transfer
Bank transfers are one of the most secure and efficient payment methods. Bank transfers can be done quickly via the ‘Faster Payments’ or CHAPS (Clearance House Automated Payment System).
You’ll have to provide the buyer with your bank details, including your name, a six-digit sort code and your account number. Sometimes, the buyer might not be keen to wait for the several days a bank transfer can take, but a genuine buyer should be prepared to do so. There can be limitations to bank transfers, for example fees or limits to the amount you can send. If you do arrange a bank transfer, keep your car in your possession until the money has been transferred. You may also be able to arrange payment using a card reader and online banking. Pros: • Funds transfer directly to your account. • Minimal risk of fraud if verified before releasing the car. Cons: • Some banks impose limits on transfer amounts. • Fees may apply for certain transfer types, e.g. CHAPS. Tips for bank transfers: • Confirm the payment has cleared in your account before handing over the vehicle. • Keep your car until the transaction is fully processed. • Only share your bank details with a trusted buyer.
You’ll have to provide the buyer with your bank details, including your name, a six-digit sort code and your account number. Sometimes, the buyer might not be keen to wait for the several days a bank transfer can take, but a genuine buyer should be prepared to do so. There can be limitations to bank transfers, for example fees or limits to the amount you can send. If you do arrange a bank transfer, keep your car in your possession until the money has been transferred. You may also be able to arrange payment using a card reader and online banking. Pros: • Funds transfer directly to your account. • Minimal risk of fraud if verified before releasing the car. Cons: • Some banks impose limits on transfer amounts. • Fees may apply for certain transfer types, e.g. CHAPS. Tips for bank transfers: • Confirm the payment has cleared in your account before handing over the vehicle. • Keep your car until the transaction is fully processed. • Only share your bank details with a trusted buyer.
3. Cheque or banker’s draft
Cheques and banker’s drafts offer a traditional way to receive payment, but they come with caveats.
You should safeguard yourself by getting proof of the buyer’s name and address in advance, in case you need to chase them up. Before you hand over the car, confirm with your bank that the funds have cleared, which is not the same as the funds appearing in your account. There’s also the option of a banker’s draft, which is guaranteed by a bank. Be aware these can also be faked. It’s a good idea to go to the bank with the seller where the funds can be drawn. To safeguard yourself, don’t release your vehicle until you have confirmation that the cheque is genuine and has been paid by the buyer’s bank. Check with your bank to ensure the draft has been ‘given value’ rather than merely ‘cleared’. A banker’s draft doesn’t clear immediately, so again, the seller will probably want to wait for the funds to clear before letting the buyer drive away. Be particularly wary of buyers who view your vehicle after the banks have closed and produce a bank draft already made out for the full asking price. Pros: • Banker’s drafts are issued by a bank and often considered more secure than personal cheques. Cons: • Both can be forged or cancelled. • Funds may take time to clear. Tips for safe use: • Verify the cheque or draft with your bank before releasing the car. • Accompany the buyer to their bank if possible to confirm authenticity. • Avoid releasing the vehicle until the funds are securely in your account. • Be cautious of buyers presenting drafts after banking hours.
You should safeguard yourself by getting proof of the buyer’s name and address in advance, in case you need to chase them up. Before you hand over the car, confirm with your bank that the funds have cleared, which is not the same as the funds appearing in your account. There’s also the option of a banker’s draft, which is guaranteed by a bank. Be aware these can also be faked. It’s a good idea to go to the bank with the seller where the funds can be drawn. To safeguard yourself, don’t release your vehicle until you have confirmation that the cheque is genuine and has been paid by the buyer’s bank. Check with your bank to ensure the draft has been ‘given value’ rather than merely ‘cleared’. A banker’s draft doesn’t clear immediately, so again, the seller will probably want to wait for the funds to clear before letting the buyer drive away. Be particularly wary of buyers who view your vehicle after the banks have closed and produce a bank draft already made out for the full asking price. Pros: • Banker’s drafts are issued by a bank and often considered more secure than personal cheques. Cons: • Both can be forged or cancelled. • Funds may take time to clear. Tips for safe use: • Verify the cheque or draft with your bank before releasing the car. • Accompany the buyer to their bank if possible to confirm authenticity. • Avoid releasing the vehicle until the funds are securely in your account. • Be cautious of buyers presenting drafts after banking hours.
4. Escrow services
An escrow service is a trusted third-party that acts as a mediator and holds funds until both buyer and seller are satisfied with the transaction.
An escrow will check the funds sent by the buyer to protect the car seller from fraud and money order scams. You can set the terms for the transaction, for example, some escrow services allow the buyer to set an inspection period where the buyer can check the car matches what they paid for. If the car does not meet what they were promised, the buyer can ‘reject’ the car and the escrow will return the money to the buyer. Escrows will charge you a fee for using their services which usually varies, depending upon the value of the vehicle being sold. They might charge a percentage of the car’s value or a set fee for their services. Either the buyer or the seller can bear the cost of the service, or you both could split the cost between yourselves. A legitimate escrow service will never ask you to wire the funds directly to another party. If you are unsure about the escrow service, look for signs that indicate that it might be fake, such as - false licence numbers, logos and copyright details, as well as a mobile phone number disguised as a foreign landline. Finally, remember that Auto Trader will never recommend escrow, payment services or payment protection to send or receive funds for a vehicle. Pros: • Adds a layer of security for both parties. • Protects against fraud and scams. Cons: • Service fees apply, often based on the vehicle’s value. • Risk of fake escrow services. Tips for using escrow: • Choose a legitimate escrow service by checking its credentials with the Financial Conduct Authority. • Avoid services asking for direct wire transfers. • Look for secure websites (https://) and verify the company’s reputation through online reviews.
An escrow will check the funds sent by the buyer to protect the car seller from fraud and money order scams. You can set the terms for the transaction, for example, some escrow services allow the buyer to set an inspection period where the buyer can check the car matches what they paid for. If the car does not meet what they were promised, the buyer can ‘reject’ the car and the escrow will return the money to the buyer. Escrows will charge you a fee for using their services which usually varies, depending upon the value of the vehicle being sold. They might charge a percentage of the car’s value or a set fee for their services. Either the buyer or the seller can bear the cost of the service, or you both could split the cost between yourselves. A legitimate escrow service will never ask you to wire the funds directly to another party. If you are unsure about the escrow service, look for signs that indicate that it might be fake, such as - false licence numbers, logos and copyright details, as well as a mobile phone number disguised as a foreign landline. Finally, remember that Auto Trader will never recommend escrow, payment services or payment protection to send or receive funds for a vehicle. Pros: • Adds a layer of security for both parties. • Protects against fraud and scams. Cons: • Service fees apply, often based on the vehicle’s value. • Risk of fake escrow services. Tips for using escrow: • Choose a legitimate escrow service by checking its credentials with the Financial Conduct Authority. • Avoid services asking for direct wire transfers. • Look for secure websites (https://) and verify the company’s reputation through online reviews.
Safety tips for sellers
• Never release your car until you’re sure the payment has cleared.
• Be cautious of buyers pushing for quick transactions or offering unusual payment methods. • Avoid transactions that require sending money abroad or paying large deposits.
• Be cautious of buyers pushing for quick transactions or offering unusual payment methods. • Avoid transactions that require sending money abroad or paying large deposits.
Safety Tips for Buyers
• Inspect the car in person before making any payment.
• Verify the legitimacy of escrow services and avoid “too-good-to-be-true” offers. • Always get a receipt and keep a copy for your records.
• Verify the legitimacy of escrow services and avoid “too-good-to-be-true” offers. • Always get a receipt and keep a copy for your records.
What to do if you think you’re a victim of fraud
If you think you’ve been targeted by a fraudster, contact Auto Trader immediately by emailing scam@autotrader.co.uk or calling 0330 303 9001.