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I am planning to buy a car with cash this weekend - first time car shopping on my own! I've found a decent used car and scheduled a test drive with a dealership, hoping to make a purchase. They've already lowered the price for me via email/phone negotiations, and the salesperson said there's potential for further discounts after I go there in person. To be honest I am pretty happy with their quoted price as it is, so I'm fairly confident of walking out with a new (to me) ride.

What I'm confused about is how a "cash" transaction actually works, particularly if I am not certain of the final price of the car. Should I get a cashier's check for my starting offer, and withdraw cash to cover the difference for the price they've already quoted me? Don't withdraw cash, put the difference on a credit card? Get several smaller cashier's checks - e.g. if they told me 14.5 and I wanted 14, get 10k, 4 x 1k, and 500 cash? (That way if it didn't work out and I went with something cheaper I wouldn't have to go back to the bank.)

I am not totally comfortable carrying around the entire amount in bills, although I could if it really is the best option. I never carry a balance on my credit card and would pay it off immediately if used for this.

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    Why would you not write a personal check? – NL - Apologize to Monica Sep 07 '17 at 16:42
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    As an alternative to @NathanL if you don't have personal checks, you can leave a small amount as a deposit then go to your bank to have a cashier's check made for the remainder. – quid Sep 07 '17 at 16:45
  • @NathanL ... good point, I guess I just assumed it wasn't an option for that large an amount. If I'm wrong that would make it a lot easier! –  Sep 07 '17 at 16:54
  • Personal checks are generally limited only by how much money you have available in your checking account. You can write a check for any value. If the money is there to cover it, the bank will clear it eventually. If the money is not there to clear it, you may have some hefty fees (and perhaps even criminal liability depending on the size of the check) when it bounces. – NL - Apologize to Monica Sep 07 '17 at 17:01
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    @NathanL Sorry that was unclear! Yes, I understand how personal checks work, I meant I didn't think anyone would accept a personal check for such large amounts due to the risk of it bouncing. But I guess that is why in mhoran's answer the dealership made him fill out a credit application, just in case. –  Sep 07 '17 at 17:12
  • No, the credit application was required only in the case of a partial deposit. If you write a check for the entire amount, the dealership can make a call to your bank to verify funds. – NL - Apologize to Monica Sep 07 '17 at 17:24
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    https://money.stackexchange.com/questions/1666/is-there-a-limit-on-the-dollar-amount-of-a-personal-check – NL - Apologize to Monica Sep 07 '17 at 17:49
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    Between getting points on a credit card for the max amount they will let you use it for and qualifying for dealer financing rebates (a loan you can pay off almost immediately after the purchase), check out all your options. It's great that you have cash to pay for it, but that doesn't mean you'll necessarily get the best deal with cash. – JPhi1618 Sep 07 '17 at 19:20
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    consider that you may get (or be able to get) discounts or extras if you take their loan, which includes a small kick-back of the interest to them as profit, and which you can then use cash to pay off within the first 30 days – simpleuser Sep 07 '17 at 20:20
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    Don't get a cashiers check before you have a final total. The price of the car isn't usually (typically) what you walk out paying. There are tax, title, dealer fees (not usual with used cars, but sometimes) and some other costs. – Ron Beyer Sep 07 '17 at 20:36
  • I have bought three cars with personal checks. The last check was in excess of $30,000. Simple. – chili555 Sep 07 '17 at 21:06
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    Since they can call your bank and verify the funds, possibly the only reason they make you fill out a credit application is so they can say "Are you suuuuuuure you want to pay cash? We can offer you !" – stannius Sep 07 '17 at 21:15
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    Sometimes people selling cars will not accept personal checks. – BrenBarn Sep 08 '17 at 03:31
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    Note that when you say you are uncomfortable having that much cash lying around - so is the dealer. He will have to pay his bank to deposit it, and it is a security risk. – Martin Bonner supports Monica Sep 08 '17 at 10:54
  • I recently paid cash for my new vehicle. The place would not accept pretty much any other method of payment. Waiting 10 minutes for them to count the bills was amusing. – Reinstate Monica Sep 08 '17 at 15:10
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    There's an old story I wish I could find, about somebody wondering why their car dealer would take a personal check for such a large amount, where the dealer responded to the effect of, “It's really simple. We don't go after them for a bad check, we go after them for Grand Theft Auto.” –  Sep 08 '17 at 17:41
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    @simpleuser's advice is sometimes good, but occasionally the loan terms include a penalty for prepaying the loan, specifically to prevent this type of tactic. Sometimes this is disguised as "interest refund" or "simple interest" or "sum-of-years-digits-method" to confuse you. – Snowbody Sep 08 '17 at 22:25
  • Any reason you don't want to just... haggle on the price, then figure out how to pay? – corsiKa Sep 08 '17 at 23:19
  • @corsiKa I'm doing the test drive after the bank closes, and I don't want to make my roommate drive me around more than necessary. –  Sep 09 '17 at 00:00
  • In the UK, the normal procedure is that you pay a "deposit" (typically 5% to 10% of the total price) when you commit to the order, and the rest when you collect the car after the dealership has serviced it, transferred the registration, arranged any temporary insurance, etc - which usually takes 2-3 working days minimum, but you can arrange a later delivery time if it's more convenient for you). There is no way a dealership would accept a personal cheque, but if you have that much balance in your account you would almost certainly have a debit card that would be accepted. – alephzero Sep 09 '17 at 01:00
  • ... the key point is that unlike a personal cheque, or even a bank cheque or credit card, in the UK a payment by debit card can not be cancelled by any method once it has been authorized by your bank. The law in other countries may be different, of course. Of course if something goes horribly wrong (like major damage to the car after paying the deposit and before you taking delivery), the dealership would probably offer you a full refund, but legally you can't demand such a refund after you have made the debit card payment. – alephzero Sep 09 '17 at 01:04
  • Businesses will typically accept any method of payment for a deposit, assuming it is a modest amount, say $1000.00, so you could write a personal cheque. As for the balance, to get the best price, you would be paying "cash", which would be in the form of a certified cheque / bank draft / cashier's cheque. The key feature of such is that the funds are guaranteed to the payee - no worry about a "bounce". A credit card may be accepted, but won't qualify you for best discount because of the associated merchant fees. You could bring currency, but unnecessary, perhaps unwise given the amount. – Anthony X Sep 09 '17 at 03:33
  • @alephzero I would have to disagree with your point about payment by a debit card can not be cancelled by any method. While chargebacks are usually associated with credit cards, it is possible with a debit card transaction. I have first hand experience of that. – Darren H Sep 09 '17 at 08:04
  • Comments are not for extended discussion; this conversation has been moved to chat. – GS - Apologise to Monica Sep 09 '17 at 18:54
  • It is interesting to see how things differ, here I would (depending on several circumstances) either pay by bank transfer or physical money – PlasmaHH Sep 11 '17 at 07:03
  • As English is my second language and I don't live in an English speaking community: When did "cash" stop to mean "money in its physical form" and switched to "money which is quickly transferrable"? All those things mentioned here - except bringing bank notes - are considered "unbar" in German, so "not cash" in the former sense. – I'm with Monica Sep 11 '17 at 11:35
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    @AlexanderKosubek In everyday transactions "cash" still means "physical money" (e.g. at a checkout they might ask "cash, credit, or debit?"). It's just with large purchases like a car or a house that "paying cash" means "not financed; money comes directly from your bank account". –  Sep 11 '17 at 12:18

7 Answers7

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I have in the last few years purchased several used cars from dealers. They have handled it two different ways.

  • They accepted a small check ~$1,000 now, and then gave me three business days to bring the rest as a cashiers check. They also insisted that I submit a application for credit, in case I needed a loan.

  • They accepted a personal check on the spot.

Ask them before you drive to the dealer. Of course they would love you to get a loan from them.

mhoran_psprep
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  • Are these physical checks? What if I don't have a checkbook or a check facility on my account? –  Sep 08 '17 at 05:26
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    I've also paid with a debit card. – Vicky Sep 08 '17 at 07:00
  • I have also paid for a car with a debit card (UK). – pjc50 Sep 08 '17 at 09:40
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    I have paid for a car with a debit card in the UK. The dealer warned me that they would have to phone for authorization, and that the card company would want to ask additional security questions. Other than that, no problem. – Martin Bonner supports Monica Sep 08 '17 at 10:52
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    I think the most important part is "ask them". – Martin Bonner supports Monica Sep 08 '17 at 10:55
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    Generally they do not let you use a debit/credit card for the entire purchase in the US (at least not at dealers I've bought from). I've paid with a personal check. – Jared Smith Sep 08 '17 at 13:07
  • Thanks for the advice - I called the dealership this morning and verified that they would accept a personal check. (This is especially good news since the appointment is after the bank closes for the day!) –  Sep 08 '17 at 15:13
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    This is a good opportunity to make sure they don't try to "up sell" you once you arrive at the dealership to sign the papers. Phone them, and get them to give you an exact, final price. Make it clear to them that you will be arriving with a check for that exact amount only. – Bradley Uffner Sep 08 '17 at 16:47
  • The last time I bought a car with a personal check, they asked me to show them my account balance on my online banking app. That was sufficient for them. – David Schwartz Sep 08 '17 at 20:28
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You could write a personal check after the final price has been set and you're ready to purchase. Another option would be to get the final price - then walk over to your bank and get a cashier's check.

Michael
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I usually get a cashiers check to cover about 90% - 95% of the expected amount (whatever I think is just below my wet-dream-price), and bring the rest in cash. That doesn't require so much cash to be carried. Alternatively you can write a personal check for the exact reminder, or go to the bank for the reminder after the deal is made - with the majority already paid in a cashiers check nobody would disagree.

Aganju
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  • But what if you're buying a nice car and 5-10% of the price is still several tens of thousands of dollars? ;-) – David Richerby Sep 08 '17 at 10:43
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    @DavidRicherby Then my car is more than $200k, at that point the concierge will talk to my bank and it will just happen. (I am only half joking, I bough my last car from the local Maserati/Aston Martin place, they had taken it on trade and it was a 'normal' car. Oh my, it was an experience to see how my betters live...) – Ukko Sep 08 '17 at 14:54
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    They hope you'll consider an Aston Martin or Maserati for your next auto purchase! These days most of those automakers use others' components, e.g. Saginaw steering gear, Hydramatic transmissions etc. similarly, Boeing does not make engines. They are basically coachbuilders at this point and where they differentiate themselves is customer experience. – Harper - Reinstate Monica Sep 08 '17 at 20:46
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When you pay cash for a car, you don't always necessarily need to pay cash. You just aren't using credit or a loan is all. A few options you have are:

  • Actual cash currency
  • A cashier's check
  • Bank deposit

Obviously no dealer expects anyone to just have the cash laying around for a car worth a few thousand dollars, nor would you bother going to your bank or credit union for the cash. You can simply get a cashier's check made out for the amount. Note that dealers may not accept personal checks as they may bounce.

After negotiations at the dealer, you would explain you're paying cash, likely pay a deposit (depending on the price of the car, but $500 would probably be enough. Again, the deposit can be a check or bank deposit), and then come back later on with a cashier's check, or deposit into a bank account. You would be able to do this later that day or within a few days, but since you've purchased a new car you would probably want to return ASAP!

Tas
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    If you do have the cash laying around, it can be worth it to carry it down there just for look on their faces. – Perkins Sep 08 '17 at 21:46
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    @Perkins Having two hundred dollars in socks full of nickles could help the negotiating process. ;) – krillgar Sep 09 '17 at 19:38
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    @krillgar My brother once paid the deposit on a car he was thinking of buying with a leather bag full of $1 coins. Sales guy took a minute to put his eyes back in his head and asked if he was on one of those hidden-camera shows. – Perkins Sep 09 '17 at 19:42
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You can pay with a cashiers check or personal check. You can even pay cash, or combine payment methods. However, in the USA if you give the dealership $10,000 or more in actual cash, they will be required to fill out a form 8300 with the IRS.

Bert
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    This is a very important point! Large amounts of cash are treated with suspicion in the United States. You may not even get to the dealer with it: If you are stopped by the police for any kind of infraction (busted taillight) and they search you and find it the cash will be confiscated and you'll be left with no car, no cash, and a long expensive and possibly fruitless legal effort to get it back from them - they'll assume it's drug money and it is up to you to prove it isn't and they don't make it easy to do. You can google for a large number of these cases. – davidbak Sep 08 '17 at 18:38
  • @davidbak: For some reason I suspect I'd have it back pretty fast in a jury trial. – Joshua Sep 08 '17 at 18:43
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    @Joshua - there is no such thing as a fast jury trial - those things take months to schedule and that only happens after a hell of a lot of legal back-and-forth. Google for it. It can take a year or more to get the money back - and you're paying legal bills for all that effort. It's a scandal, really. – davidbak Sep 08 '17 at 18:45
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    @davidbak futhermore there doesn't seem to be any presumption of innocence until proven guilty. The stack of cash being sued is assumed to be guilty of being crime profits by the mere fact of its existence. – stannius Sep 08 '17 at 19:11
  • With suspicion everywhere, the question is whether you're dealing with a threshold of €10,000, CDN$10,000, etc. I've seen a CA border patrol show where they made a Big Deal about an American who had USD8500. – Harper - Reinstate Monica Sep 08 '17 at 20:57
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    The not-immediately-obvious key word to search for is 'forfeiture', usually modified by 'civil' and/or 'asset'. – dave_thompson_085 Sep 08 '17 at 21:13
  • @davidbak : I've heard stories of it ruining lives & businesses (getting stopped & searched when someone was going to buy something significant for their business where the seller wanted cash), you have to be able to prove where the money came from, stuff like that ... and you won't get it back 'til after the trial, so you're SOL all that time. – Joe Sep 09 '17 at 01:59
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The very first time I bought a new car I wrote out a personal check for $5000 (this was a looong time ago!). And got a call from the sales person that he had called the bank and was told that I did not have that much money in my checking account! I explained that I had just that day transferred money from savings to checking. The sales person accepted that and there was never a problem after that.

user62501
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  • Just because this one car dealer accepted your bad check doesn't mean every dealer will. I am pretty sure your car dealer was quite anxious when the bank told them your check wasn't good, because in that moment you had the car but they had no money. If you had just disappeared with the car, the dealership would have been in a quite bad situation (especially if you already had the car title). – Philipp Sep 08 '17 at 14:30
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    @Philipp - I wouldn't call the check "bad". The bank's system simply hadn't updated yet. The exact same scenario happening today would have resulted in the banker saying there was enough money in the account. – TTT Sep 08 '17 at 17:31
  • @Philipp - "just disappeared with the car"? I've been given a car to "demo" for the weekend with the dealership keeping nothing more than a copy of my driver's license (and my old car). They'll know where you live, they know the number for the local constabulary and I bet they know the number of a good repo-man. If a personal check comes back as NSF (not sufficient funds,) the dealer is no worse off than if one never returned from an extended test drive. They have their ways... – MrWonderful Sep 08 '17 at 21:02
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    @Philipp, back in the era when you could buy a new car for $5000, banks used a technique called "batch transaction processing": they'd queue up all the day's transactions, and run them through the computer in a single go overnight. The number that the car dealer is getting from the bank is yesterday's checking balance resulting from last night's transaction run; the number that matters is tomorrow's checking balance, when the check actually enters the transaction queue. – Mark Sep 09 '17 at 19:15
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Ask the dealer to drive to the bank with you, if they really want cash.

Klaws
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  • They don't. "Cash" is shorthand for cash, check, debit card, money order, bank check, and in many contexts also credit card, and in this context also non-dealer financing. It means the dealer gets a lump of cash equivalent, and does not collect a hefty sales commission for putting you into their financing. (The creditor gets the sales commission back either in interest, or in an "early exit" fee.) – Harper - Reinstate Monica Sep 08 '17 at 20:53