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Advice

Selling a car: receiving payment

Once you’ve negotiated and agreed a price, it’s time to receive a payment. This article covers the different types of payment, and advice on how to securely transfer funds.

Words by: First published: 25th March 2019
Cash
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 you don’t handover at the bank, make sure you count the money and be careful walking around with large sums of cash.

Related: How to safely sell your car
Immediate bank transfer
Online bank transfers are one of the better ways to get paid, and these can be done quickly via the ‘Faster Payments’ or CHAPS systems. Just be aware you’ll have to provide the buyer with your bank details.

It’s quite possible the buyer might not be keen to wait for the several days this can take, but a genuine buyer should be prepared to do so.

There can be limitations to bank transfers, for example:
  • CHAPS (Clearance House Automated Payment System) may charge a fee for use

  • If using ‘Faster Payments’ services, note that some banks have a limit on how much you can send

You may also be able to arrange a payment using a card reader and online banking.

If you do arrange a bank transfer, keep your car in your possession until the money has been transferred.

Related: Top tips to stay safe online
Cheque or banker’s draft
If you decide to accept a cheque or banker’s draft, you should safeguard yourself by getting proof of the buyer’s name and address in advance, just in case you need to chase them up.

Before you hand over the car, you should 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, so it’s a good idea to go to the bank with the seller where the funds can be drawn.

A banker’s draft doesn’t clear immediately, so again the seller will probably want to wait for the funds to clear before letting you drive away.
Escrow
In an escrow, a third-party acts as a mediator between the buyer and seller, holding and the distributing the money.

If you use this method, make sure the company is legitimate by checking with the Financial Conduct Authority, who keep a list of unauthorised firms and individuals to avoid.

Finally, no matter how the money changes hands, the most important thing is that you should provide a receipt to the buyer, and keep a copy for yourself.

Related: What to do once you’ve sold your car
How to ensure your payment is made safely
No matter whether you're buying or selling, a smooth payment is the best way to end a successful transaction. Here, we explain how to take the risk out of making or receiving a payment using the main options available. Whichever method you choose, though, never send money for a vehicle you haven't seen.
How to spot a fraudulent payment
When you’re selling a vehicle, it’s important you know how to spot the signs of a possible fraud. No matter how trustworthy the buyer you're dealing with appears, have a look at the following rules:
  • Never send money abroad
  • Never pay a large deposit
  • Don’t hand over your vehicle until you’re satisfied the funds are in your account. Check with your bank you can withdraw funds safely on the cheque
  • Remember your bank will not honour fraudulent drafts or drafts that cannot be cleared through lack of funds
  • Don’t be pressured into releasing your vehicle. A genuine buyer will not mind waiting until the draft has cleared
Security: bankers’ cheques
When you're selling a car, you should be aware of the possibility of receiving a forged bankers’ draft.

The typical scenario will run something like this:
  • First, you receive a cheque from the buyer

  • Days later, your bank informs you the cheque was forged

  • The result is the buyer has already taken possession of the vehicle and you’re left without payment

To safeguard yourself, don’t release your vehicle until you have confirmation 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’.

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.
Security: escrow services
An escrow service mediates between a buyer and seller, and they operate like this:
  • First, the buyer transfers the payment to the escrow service

  • Then, the buyer takes delivery of the goods

  • Finally, the escrow service releases the payment to the seller

  • Some are entirely above board; however, others are fraudulent services which appear legitimate, but are run by fake ‘sellers’ who target unwitting buyers

In a typical example, the ‘seller’ places a fake advert with an unusually low price to grab the buyer’s attention. When the buyer enquiries about the vehicle, they’re sent a standard reply, promising to waiver the shipping costs and suggesting payment is made via a particular escrow service. After the money is sent, the buyer becomes impossible to contact and untraceable.

If you are concerned you are in such a position, look for signs it may be a fake escrow service. These include false licence numbers, logos and copyright details, as well as a mobile phone number disguised as a foreign landline.

On the other hand, there are also ways to spot a legitimate escrow service:
  • A legitimate service will never ask you to wire the funds directly to another party

  • Look for sites which have a padlock icon at the bottom of your screen and ‘https://’ at the start of the website address – this means the site is secure. Avoid ones that don't.

  • If you’re suspicious, type the company’s name into a search engine. A legitimate escrow service will have a number of results listed, whereas a fake escrow site will have very few

Finally, remember that Auto Trader will never recommend escrow, payment services or payment protection as a means to send or receive funds for a vehicle.

However you take payment, always take care:
  • When receiving cash, ask for the money to be handed to you in a bank, where the notes can be checked for forgeries and paid in immediately

  • If you take a cheque, never let the buyer have your vehicle until the funds have appeared in your bank account, as the cheque could be forged, cancelled or stolen

  • Bank drafts, contrary to common belief, are not as good as cash, so treat them just as you would a personal cheque

  • An online bank transfer is one of the safest ways to pay, as it avoids having to handle large amounts of cash and the problems associated with cheques

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.