Paying for a Car By Bank Transfer: Good Idea or Bad?

A bank wire transfer works as a payment method when buying a private-party used car—but it sure is clunky and outdated. There’s a better way.
PrivateAuto Pay enables instant and fee-free fund transfers, anytime, 24/7/365.

Avoid the hassles of traditional bank transfers. Stop giving out your banking information. Enjoy ultimate convenience and protection.

Buying from a Private Seller vs a Dealer

Many people believe that buying a car from a dealer will save them money. Actually, going to a dealer is more expensive.

Dealerships charge documentation fees above and beyond all the other taxes and fees you have to pay (the other taxes and fees are exactly the same whether you buy from a dealer or a private seller, by the way). Documentation fees can be as high as $995.
Used car dealerships usually have higher prices. Their business model is built around buying low and selling high to generate the spread that allows them to stay in business. To get the best deals, avoid the middleman and deal directly with private sellers.
There are a lot more private-party cars for sale than there are dealership cars, so you have access to a much wider selection.
Many private-party vehicles have been owned and maintained by the same person since they were new. A private seller may have a lot more insight into the vehicle’s condition and maintenance history than a dealer does.

When you shop used cars for sale by owner on PrivateAuto, you avoid the doc fee and get a better deal.

We admit that buying from a dealer provides a level of convenience that is not typically available when buying from a private seller. That is, after all, why we exist. PrivateAuto gives you dealer-like convenience while also allowing you to transact with regular people like yourself.

Cutting out the middleman unlocks major savings. Our pioneering protections, like verified IDs and secure messaging, enable private sales with peace of mind. Buy directly from motivated sellers on your terms.
Image highlighting Buying/Selling Car Privately by PrivateAuto

Can I Pay by Bank Transfer for a Used Car?

Bank wires are tried-and-true channels, but they’re super old-school. Paying for a used car via bank wire transfer is not exactly fast and convenient.

The seller will need to give you their banking info. Even though you’re trustworthy, they don’t know you, and they may be uncomfortable revealing this information (wouldn’t you be?).
The funds transfer may take several hours (or in some cases, several days) to process, preventing you from concluding the deal in one get-together.
Weekends and holidays slow the transfer process even more.
Your bank (or the seller’s bank) may have transfer limits, forcing you to do a series of transfers.
Fees: most banks charge fees for outgoing and incoming transfers.
Coordination challenges: both parties must carefully synchronize sending and receiving transfers, introducing opportunities for delays or confusion.
Bank wires lack purchase protections, meaning you have no recourse if the seller disappears after receiving the money.

PrivateAuto Pay enables instant, secure transfers. Conveniently and safely pay a private seller electronically in seconds, anytime 24/7.

What is the Safest Payment Method when Buying a Car?

What if there was a smooth, digital way to pay strangers instantly without fees? A method as sure as a suitcase full of bills, but without the hassle and risk of physical cash?

Say goodbye to physical cash, checks, ACH transfers, and every other cumbersome payment method. It’s time for a better way to pay for private-sale cars.

What is PrivateAuto Pay?

PrivateAuto Pay is our integrated payment solution. It’s a core part of the PrivateAuto transactional marketplace, and it’s like nothing you’ve seen before.

Your PrivateAuto Pay account is actually a bank account that you own, accessed via your PrivateAuto profile.
Easily move money between your PrivateAuto Pay account and your external bank account via a balance transfer.
Send up to $1 million with no transaction fees.
Strong encryption protects your data from hackers.
You can even buy a car remotely if you find your perfect vehicle in another state (and then arrange for car shipping right within our app).
Instantaneous payments enable real-time deals—no waiting or coordination. Close the deal when you meet for the test drive.
Works 24 hours a day, 365 days a year. No coordinating around banker’s hours.
No exchange of contact or banking info—your sensitive information stays safe, protecting you from scammers.
Escrow-like safeguards eliminate the need for an escrow service, allowing you to save money.
Use PrivateAuto Pay for your transaction even if you met the seller on another site, such as Facebook Marketplace or Craigslist. Just invite them to our DealNow fast-track solution and enjoy the power of PrivateAuto Pay and our other transactional features.

How Does PrivateAuto Pay Solve Payment Issues?

With PrivateAuto Pay, you can ditch cumbersome bank wires and pay instantly, safely, and conveniently right from your smartphone.

No more coordinating multiple transfers due to strict limits. No more aligning with banking hours or long processing delays. Just seamless, instant digital payments between verified accounts, 24/7.

Transfer large sums securely in seconds without exposing your personal account information. Enjoy escrow-like protections without any third party fees.

Whether transacting in-person or buying a car in another state, PrivateAuto Pay is the smartest way to pay private sellers. You can act decisively on a great used car while keeping your money secure.

How Do I Buy a Car With PrivateAuto Pay?

PrivateAuto Pay makes purchases simple and secure.

1. Fund your PrivateAuto Pay account. You can initiate an instant funds transfer from your bank anytime. No limits on transfer amounts. If you need to [get a loan for your car], you can do so right in the PrivateAuto app. Once approved, the lender will fund your PrivateAuto Pay account.
2. Browse used cars for sale by owner on PrivateAuto (or even on another site). Find the one you want to buy.
3. Meet the seller via our in-app scheduler without ever giving out personal info such as email or phone number.
4. Review your in-app bill of sale, financing terms, and other documents. Digitally sign them in the app. The seller signs them as well, and you get a notification when they have done so. Once you and the seller have electronically signed the bill of sale, they are legally obligated to transfer the title to you after receiving your payment.
5. Once you receive notification that the seller has signed the bill of sale, approve payment. PrivateAuto Pay will instantly transfer the funds to the seller’s PrivateAuto Pay account.
6. The seller transfers the title to you and gives you the keys.
7. Drive away in your new-to-you car with a binding record of the entire transaction stored in your PrivateAuto account.
8. Complete the title transfer at the DMV, and get new license plates and registration.

Found a car you like somewhere else? We got you! Use our new DealNow feature to fast-track a transaction with our infrastructure, even if you met the seller on another platform like KSL Cars.

DealNow uses PrivateAuto Pay for payments and offers all the same conveniences, along with a fast-tracked deal flow.

What Is The Best Place To Buy A Car From A Private Seller?

There are a sea of places where you can buy a car, but they don't give you the transactional features to get the deal done safely, securely, and inexpensively like PrivateAuto does.

Here are some popular platforms for buying used cars online:

eBay Motors
Local classifieds sites (for example, KSL Cars)
Facebook Marketplace

These are all “meeting places” rather than true marketplaces; they connect you to the vehicle owner but don’t give you the transactional infrastructure to get the deal done.

PrivateAuto is the only transactional marketplace that offers a full suite of tools that let you get the deal done quickly, securely, and easily

Here's how we stand out from our competitors:

Verified users for trusted transactions.
Private in-app messaging with sellers.
Schedule vehicle transport within the PrivateAuto app
Eliminate the need for an escrow service.
Send instant offers on any vehicle.
Secure transfers of up to $1 million, instantaneous and fee-free
Shop for used car warranties and get warranty coverage
In-app test drive scheduling and document signing.
Complete purchases remotely without meeting in person (perfect for out of state transactions).
Apply for competitive financing from lending partners.
DealNow feature to fast-track a deal using PrivateAuto infrastructure.
Encrypted info protects your data from hackers
Shop insurance quotes and get coverage right within the PrivateAuto app

Even though PrivateAuto is by far the best app for buying a car, we don’t hate these other “meetingplaces” at all. In fact, if you find a car on one of them and want to buy it, you can still use our transactional infrastructure to get the deal done. Simply invite the seller to our DealNow fast-track solution to enjoy the security, privacy, and immediacy of PrivateAuto Pay and our other features.

What are the Tax Implications of Buying a Car in Cash?

Unless you live in a state without sales tax, you’ll need to pay sales tax on your vehicle purchase. Other than that, there aren’t a lot of tax implications when buying a car—whether you pay cash or get a car loan.

Here’s what you need to know about tax implications for vehicle purchases in a general sense. Always do your research on your state’s requirements, as they may vary.

No income tax. A car purchase is not taxable income, so no income taxes are owed.
No gift taxes. Even gifting the car to someone later does not generally incur gift taxes unless it's a very expensive car. Individual state rules may differ
Sales tax. You will owe the applicable state sales tax on the purchase price. The rate varies by state but averages 4% to 7% of the car's value.
Private car sellers may not collect tax. You will need to formally self-report and pay sales tax to your local DMV when you register the car.
Sales tax exemptions: research what exemptions are available in your state. Some states waive tax if a transaction is between immediate family members, or if the registrant is a religious organization, government body, or some other exempt status.

Find your Dream Vehicle on PrivateAuto

Here’s the PrivateAuto car buying process, and how we make it easier.

1. Browse used cars for sale on PrivateAuto.
2. Look at the top of the page for the "Filter by Location" button. There, you will enter your desired location.
3. Set a search radius, such as 25, 50, or 100 miles.
4. You can make your search even more specific by using a wide range of filters, such as the year, the price range, the trim, etc.
5. When you click "Search," a list of all the cars that match your search criteria will appear.

Image highlighting Buying Car Privately by PrivateAuto
Want to sell your car? Create a listing on PrivateAuto and connect with buyers today!

FAQ on Paying For a Car by Bank Transfer

How long does a bank transfer take to clear?

Money transferred between banks can take anywhere from one to five business days to clear, depending on the method used (check, peer-to-peer app, or wire transfer).

PrivateAuto Pay makes payments easier. Our secure digital system allows you to transfer any amount instantly, 24 hours a day, seven days a week.

What if I can't afford to pay the full amount in cash?

Does PrivateAuto offer plans for loan payments?

Is paying with a check better than paying in cash?

Does PrivateAuto provide the necessary paperwork for a successful transfer of ownership?

Do I need an escrow service when buying a car privately?

Is PrivateAuto Pay secure?

How do I avoid scams when buying a used car from a private seller?

What do you do after you buy a car from a private seller?