by Andrew Rohrlich

Buying a car from a private party can be an exciting and rewarding process. Prospective buyers can find a great car without the hassle of dealing with dealerships and their paperwork or extra fees. Paying for your new car is one of the most important steps of the private party car purchase process, but it can make you understandably nervous.

But there's no need to be overly fearful. As long as you take precautions to protect yourself, private party car purchases can be completely safe, even during the money transfer process.

5 Things To Consider When Transferring Money in a Private Car Sale

In preparing to buy a new car, you may wonder about the safest way to transfer money when buying a car. Let's take a look at some simple ways to transfer money safely.

There are five things to be aware of when transferring money in a private car sale that can ensure a safe transaction.

1. Take Safety Precautions and Verify Seller

It's important to verify the seller's identity before you meet. Ask for their name, their motive for selling the car, their general location, and more so you can verify they are a real person.

You can also verify the vehicle. You can get the car's vehicle identification number (VIN) from the seller and look up the vehicle history report online. The history report will give you important details about the vehicle, such as:

  • Previous owners
  • Title liens and blemishes
  • Accidents
  • Fraud history
  • Maintenance history
  • Lemon status

Safety is another important consideration when someone is selling a car privately for cash.

It may be best to meet in a public location instead of at their house or yours. You can choose a designated safe exchange zone in your city if it has one, or a public location with other people around like a parking lot of a busy mall or department store. It's also a good idea to meet during the daytime instead of at night time.

Safety precautions also include protecting yourself from buying a lemon. It's best practice to have a trusted mechanic perform a pre-purchase inspection. You can also test drive the car, driving it around town and on the highway to get a feel for how well it drives.

All these measures protect you from giving money to a scammer or purchasing a defective car.

2. Consider Fraud Protection When Available

There are several types of fraud private sellers can commit when you purchase online, such as odometer fraud, not delivering a vehicle, or not disclosing vehicle defects in the title.

Fraud protection, also known as consumer protection, may be available on some platforms to protect you. For example, eBay provides Vehicle Purchase Protection (VPP) to cover up to the cost of the car if the seller on their platform commits fraud.

You may also consider fraud protection for your personal information, such as:

  • Credit report
  • Driver's license
  • Bank accounts and bank statements
  • Social security number (SSN)

While your bank accounts and credit cards already have some measure of fraud protection, there are often gaps in coverage. It may be best to purchase fraud and identity theft protection services for the transaction.

3. Be Cautious When Using Personal Checks

Checks remain one of the most common forms of payment for private transactions, but they may not be the best way to pay for a used car.

Checks do include safety measures like specialized backgrounds and watermarking. However, checks also display personal information like your:

  • Full name
  • Permanent address
  • Phone number
  • Bank routing and account numbers

It's best to be cautious when using this payment method. Other payment methods like payment apps tend to offer better fraud and identity protection than checks.

4. Traditional Mobile Payment Apps Aren't Always Worth the Efficiency

We all love how easy it is to make payments with mobile payment apps. But efficiency may not be a good tradeoff for security.

According to the New York Times, the more popular traditional mobile payment apps such as Cashapp, Zelle, Venmo, and Square Cash may not be as secure.

While these apps provide tools to protect your account and personal information from the other party, they share or sell your data to third parties for marketing purposes. This can potentially expose your personal information and linked credit cards or bank accounts to unwanted parties.

Many also include a transaction fee, which can increase how much you have to pay for the car.

However, Apple Pay, Google Pay, and Facebook Pay do not share your information with third parties. Apple and Google also don't use your data internally for marketing purposes. These methods of payment may be more secure than the other more traditional mobile payment apps.

Newer dedicated checkout solutions and eWallets like Alipay offer an even higher level of security. They often include traceable and secure digital payment methods, digital certificates, and digital authentication. They may even require signatures before funds are removed from your account.

5. Leverage Secure Escrow Services

Wire transfers can expose important personal and financial information to the receiver, and you may end up with a lemon and lost money with cash payments. A legitimate escrow service protects you when you move money between accounts or pay with cash.

A vehicle escrow service is a finance company that holds, verifies, and protects funds in an account until the paperwork is complete and the title is transferred. The escrow service only releases the funds to the seller once you receive the vehicle and the title. If the sale doesn't go through, you get your money back.

When you use an escrow service, you can have peace of mind knowing that your personal information and money are secure.

This article was written by Andrew Rohrlich. As a brand and product marketing expert, Andrew Rohrlich has crafted products, experiences and communications for household names like Gap and for multiple automotive technology businesses. For nearly a decade Andrew has studied automotive retail in depth from a customer point of view and aggregated the industry’s best research, thought leadership and know how to provide credible and important information to auto shoppers and sellers.

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