Car Clinic - Selling Your Car

Cash is king

Most payments for cars bought privately continue to happen in cash. It’s convenient, immediate and flexible. But the risks are obvious. To keep safe, we’d recommend that you accompany the buyer to the nearest branch of the bank. Don’t accept the money from him or her. Once at the bank, give him or her your account deposit book and together pay in the agreed sum.

That done, hand over the keys, before completing the paperwork.

Other payment methods

But if you can’t get to the bank, there are alternatives. The Clearing House Automated Payment System (CHAPs) is a service banks provide. For a fee (typically £20-£35) money is moved directly from the buyer’s account to yours, usually on the same business day. Once, it’s there the money is usually secure, although it is possible for it to be recalled if the sender convinces the bank that it has ended up in the wrong place.

The drawback for buyers and sellers is the cost, plus the fact that it may take until about 4pm on the day to show up in the seller’s account.

BACS, short for Bankers’ Automated Clearing Services, can also be used to move money direct from one account to another. For most private account holders it’s free, but it can take up to three working days for the money to complete its journey. It is also relatively easy for the sender to cancel or recall a transaction. In response to criticism of the slowness of BACS, banks set up Faster Payments Service. This does the same job as BACS but allows customers to complete same-day payments online or by phone and, in most cases, without charge.

Not all banks offer the service, however, and both buyer’s and seller’s banks must provide it for it to work. Most banks place limits on the amount that can be transferred per pay. For Barclays customers, it’s £10,000 but for those with Yorkshire Bank it’s £10,000. Here’s how other major banks shape up.

Banker’s drafts

Banker’s drafts, which are also known as ‘bank cheques’, take funds directly from the financial institution that issues them. This means that they ought to be as good as cash. Unfortunately, there have been too many cases of cars bought fraudulently using forgeries.

The problem for the buyer is that the fake draft is only discovered a couple of weeks later once it completes the bank’s clearing cycle – giving the ‘buyer’ more than enough time to disappear.

There have even been instances where criminals have persuaded sellers to accept cheques exceeding the value of the vehicle and pay a cash ‘adjustment’ so that the figures balance… but leaving them even further out of pocket once the deception becomes apparent.

Cheques

Personal cheques are a poor way of handing over money. Be aware that while most banks will credit your account with the funds after three working days, it can take two weeks or longer for the cheque to progress through the bank’s clearing system and be finally honoured. If it ‘bounces’, the amount credited will vanish from your account.

Be especially wary of cheques or drafts drawn on a third party account (ie not belonging to the buyer), business cheques or any made payable to the buyer but altered and initialled to show you as the payee.

Above all else, reach an arrangement between buyer and seller that works for both. Whatever you do, don’t let the buyer take your car until he or she has paid you for it – in full.

No matter how attractive any deal for part-payment now, and balance later sounds, we’d advise you to steer clear.

Buyer beware

And, if the buyer calls a week later and asks for his money back because the car has broken down, you probably don’t have to give it to him.

The Sale of Goods Act, which underpins most of the consumer protection we depend upon when buying goods from stores, doesn’t apply to transactions between private buyers and sellers.

Here: it’s very much a case of ‘buyer beware’. Unless you’ve lied about the car’s condition or past, in your advert or when answering questions, he or she hasn’t much of a case against you.