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8 Ways To Exchange Funds in Private Car Sales

8 Ways To Exchange Funds in Private Car Sales

Private car sales are better for both buyers and sellers, compared to going through a dealer. Dealers want to buy low and sell high–and pocket the spread. A private sale cuts out the middleman.

With a private sale, buyers can typically get a bargain compared to buying from a dealer.

Sellers, in turn, can get a higher price than they would from a dealer trade-in.

Everybody wins!

Almost. Private car sales, it turns out, are full of all sorts of challenges. Until PrivateAuto came along and made those challenges disappear, that is.

The Challenges of a Private Car Sale

  1. Trust. Do you know who you’re dealing with? Nobody wants to risk getting scammed, mugged, or robbed by a random stranger.
  2. Paperwork. Do you know how to do a bill of sale for your state? Do you know exactly how and when to transfer a vehicle title?
  3. Payment. How are you planning to transfer funds? Available options are either:
  4. Risky
  5. Untenable for large transactions (volume limits on transfers)
  6. Slow (and therefore time-consuming, and requiring an unnatural degree of trust between strangers)

Let’s have a closer look at Challenge #3: paying for a private auto sale, and the problems with existing payment methods.

Then we’ll see how PrivateAuto makes the whole process easy, secure, and convenient.

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Transferring Funds in a Private Auto Sale


Traditionally, cash is the most reliable way to get paid.

It’s also a little scary from the buyer’s perspective. Who wants to meet a total stranger while toting a bag of cash?

  • How do you know they’ll give you the title if you hand them the cash?
  • How do you know they won’t hit you over the head and run with the cash?

Beyond the risk factor, there’s transactional legitimacy.

Making Your Cash Sale Official

A cash transaction doesn’t create a paper trail. There’s no proof of payment. You’ll need a receipt with signatures from both parties.

The Problem of Counterfeit Cash

Of course, you’ll need to be on the lookout for counterfeit bills. You can get a counterfeit detector pen at almost any place that sells office supplies.

But the detector pen can only verify that it’s genuine banknote paper. It won’t find “bleached” counterfeit bills.

Bleaching is a technique where counterfeiters take low-denomination bills and bleach the ink off. Then they print a higher denomination on them.

For example, a $100 bill could be a bleached $1 or $5 bill.

But bills $5 and higher have a security strip. You can detect it with a UV light. Some office supply retailers sell counterfeit detector pens with a UV light in the cap. They aren’t very expensive, and they’re easy to carry.

Bottom line: cash is less than ideal for a private auto sale.

Personal Check

A personal check is just paper until the funds clear. No savvy seller would let a buyer drive off with the car until the funds are verified. This extends the transaction into a multi-day affair and requires an inordinate amount of trust between two strangers.

  1. The buyer and seller meet
  2. The buyer provides a personal check to the seller for the agreed value of the car
  3. The buyer and seller part ways
  4. The seller deposits the check and waits (sometimes several days)
  5. The check clears and the seller notifies the buyer
  6. The buyer and seller meet again
  7. The seller gives the car to the buyer along with transferring the title

That’s a lot of steps, a lot of trust, and a lot of time to do what could be a simple, instantaneous transaction.

Cashier’s Check

Unlike a personal check, a cashier’s check represents guaranteed funds…if it’s genuine.

Even with special watermarks, laser-embossed seals, and other security devices, cashier’s checks aren’t foolproof. Some clever crooks can make realistic-looking fakes.

(If you can, meet the buyer at the bank or credit union. That way you can verify that it’s genuine.)

You pay a small fee for a cashier’s check. It’s usually less than $15. Some credit unions allow their members one or two free cashier checks a year.

It’s tough to replace if it gets lost or stolen. The bank will require you to get an indemnity bond from an insurance company.

A bank or credit union might make you wait 30 to 90 days before they issue a replacement. You might wait up to 180 days before you get a refund for the original check.

You’ll pay a service charge for stopping payment on the original check. It’s usually around $35.

So, a bit more security with a cashier’s check, but the process is still more cumbersome than it needs to be.

Wire Transfer

Automated Clearing House (ACH) Transfer

An ACH transfer is used for direct deposit of paychecks, automatic bill payment, transfer of funds between bank and investment accounts, and more.

This kind of wire transfer relies on a network of financial institutions. They are sent in batches. It can take 3 or 4 business days.

Business accounts can send money through ACH transfer. Most personal accounts don’t have that ability.

Bank Wire

You can wire bank funds to any domestic or foreign bank account. Funds from a domestic wire become available within 24 hours. Unfortunately, most banks close at 4pm and are not available on weekends or holidays. So, if you’re trying to get a private sale done via bank wire, you’ll need to schedule it to coincide with banking hours.

Typical fees to send a wire are $30 or more. You’ll likely pay $15 or more to receive it.

You have to give personal information to receive a bank wire:

  • Full name
  • Address
  • Routing number and account number

Wire transfers of all types have the disadvantage of being non-instantaneous. This means that you won’t be able to do the transaction at one time. As with a personal check, the buyer and seller will need to have a certain amount of trust, which can be problematic between total strangers.

Escrow Service

When you put funds in escrow, the escrow service holds them until the seller delivers the goods. The buyer accepts delivery and informs the escrow service. The provider then releases the funds.

Escrow is commonly used in long-distance transactions. For example, if a buyer and seller are in different states. You can use escrow in a local sale, but it can take 5 to 20 days.

Escrow service comes with transaction fees. It’ll cost you 3.25% or more of the transaction amount. If you’re funding the escrow with PayPal or a credit card, expect another transaction fee of 3.05% or higher.

You get a break in the fee rates as the transaction amount increases. Using as an example, it’s $162.50 plus 0.26% for transactions over $5,000 up to $20,000. Anything over $25k and you’ll pay 0.89%.

If you have the escrow money sent by wire, it costs $10.00. There’s no fee for ACH transfers, but you won’t see the money for up to 3 business days.

Escrow can solve the trust issue endemic to non-instantaneous payment methods, but it’s still expensive and time-consuming.

PayPal Mobile Cash

You can send and request money online with PayPal. Both parties need to have a PayPal account.

When you transfer funds to PayPal, it takes a while for them to become available—up to 5 days.

So, we’re back to the same issue of trust that comes with accepting a personal check: the seller will need to wait and verify, and the buyer will need to trust.

Peer-To-Peer Cash Sharing


The PayPal-owned Venmo app is primarily a way to repay money to friends and acquaintances without carrying cash.

For example, if you’re splitting the bill for Thai food takeout, you can pay your share with the Venmo app. It only allows you to send or receive money from people who also have the Venmo app.

When you transfer funds from the Venmo account to the bank, it takes a good 1-3 business days.

Venmo has a weekly person-to-person spending limit of $4,999. Payments to authorized merchants or spending with the Venmo debit Mastercard decrease the amount available for person-to-person spending.

In other words, if you spend $3,000 at authorized merchants this week, you have $1,999 left to send to another Venmo user.

This means that Venmo doesn’t have a lot of buying power for private used car shopping.

It’s designed for people who know and trust each other. Venmo recommends that you don’t use the app to pay people you don’t know such as a private car seller.

Cash App

The Cash App from Square lets you send and receive money by:

  • $Cashtag. Cash App lets you create a unique identifier. When you set it up, it creates a URL where people can make secure payments.
  • QR scan. The app lets you create a QR code that people can scan to send you money.
  • Phone number.

Cash App has a limit of $7,500 every 30 days. If you’re transacting under that amount, it can be a good avenue for paying for a private car sale. Over that amount…not so useful.

Google Pay

If you have an Android device, Google Pay might be a good way to transfer funds.

The app encrypts your banking info so you can send and receive secure payments.

You need to link Google Pay to a debit or credit card. It doesn’t allow ACH transfers. You can keep up to $25,000 in your account.

Google pay doesn’t use a PIN, face recognition, or fingerprint for security. You only need to have the device unlocked. Be sure to lock your device if you have Cash App.

Apple Pay

This app is a lot like Google Pay, but for Apple devices. It uses face recognition and fingerprint for security. It lets you send and receive funds from an iPhone, iPad, or Apple Watch.

PrivateAuto Pay

Each PrivateAuto account has full banking integration with our banking partner. When a seller transfers funds to a buyer, it happens instantaneously, 24/7/365. With no transaction fees.

We call it PrivateAuto Pay. Car buyers and sellers call it awesome.

Buyer and seller need only connect their respective bank accounts with PrivateAuto and they’re ready for a quick and secure funds transfer.

  • Encrypts personal info to keep it safe from hackers
  • Enables instantaneous transfers of up to $250,000
  • Verifies buyer funds presale (seller doesn’t need to waste time with buyers that can’t afford the car)
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Much More Than a Payment Platform

So PrivateAuto enables fast, secure, and fee-free payment in a private auto sale. It’s in a league of its own for eliminating risk, getting the deal done fast, and offering ultimate convenience.

Payments are only part of the process though. There are many more steps in the private car transaction lifecycle, and we make them all convenient, secure, and easy.

Learn more about how PrivateAuto facilitates buying or selling a used car.