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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? – Nathan L Sep 7 '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 7 '17 at 16:45
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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. – user40002 Sep 7 '17 at 17:12
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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 7 '17 at 19:20
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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.” – Peter Cooper Jr. Sep 8 '17 at 17:41
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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.

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    I've also paid with a debit card. – Vicky Sep 8 '17 at 7:00
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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 Sep 8 '17 at 10:52
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    I think the most important part is "ask them". – Martin Bonner Sep 8 '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 8 '17 at 13:07
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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 8 '17 at 16:47
19

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.

  • What if the bank is not within walking? I guess the dealer would probably give you a ride. – stannius Sep 7 '17 at 21:17
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    @stannius OP could test drive the car to the bank lol – Michael Sep 7 '17 at 21:18
  • @Michael I've actually done this. Drove the car off the lot to get my insurance payout to use as the down-payment on the car. – Douglas Gaskell Sep 8 '17 at 20:59
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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.

  • 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 8 '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 8 '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 Sep 8 '17 at 20:46
7

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!

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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 8 '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 9 '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 9 '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.

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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 8 '17 at 18:38
  • @davidbak: For some reason I suspect I'd have it back pretty fast in a jury trial. – Joshua Sep 8 '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 8 '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 8 '17 at 19:11
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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 8 '17 at 21:13
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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.

  • 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 8 '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 8 '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 8 '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 9 '17 at 19:15
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Ask the dealer to drive to the bank with you, if they really want cash.

  • 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 Sep 8 '17 at 20:53

protected by Ganesh Sittampalam Sep 9 '17 at 19:01

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