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Paying For Your Car

piggybankSo you’ve done your research, found the car of your dreams and now you’re ready to seal the deal. Once you’ve shaken hands and agreed that all important sale price, it’s time to hand over some money. However don’t simply rush to the cash machine, consider some of your options first.

Firstly offer something in the form of a deposit which will ensure the car is sold to you. This can be anything from £100 to £1000 but generally it needs to be enough to show you are serious about buying the car. If purchasing from a trusted dealer, they will have set deposit prices which are governed by the total value of the vehicle.

If it’s a private sale then cash will be the preferred method of payment for the deposit. Dealers on the other hand will have no problem excepting a cheque or credit/debit card.

The Deposit is your new Contract

Once the deposit has been paid, you and the seller are locked into a binding contract. For you, the buyer, this is a good thing and the whole reason you paid it in the first place. However if you change your mind about the car, then the seller has the right to claim compensation for their wasted time and any expenses incurred. Usually this means they keep the entire deposit you handed over. Only ever hand over a deposit if you’re 100% committed to buying the vehicle.

cash for carOnce you’ve paid make sure you receive a detailed receipt of the transaction. It needs to state how much has been paid, what the product was and the outstanding balance. Finally if buying from a dealer who is arranging finance on your behalf, ensure the receipt states ‘subject to finance’. This means you’re not committed to buying the vehicle if their finance company cannot facilitate the deal.

Paying With Cash

In many cases if you’re buying privately, the seller will insist on a cash payment for the full amount. To be as safe as possible, ask them to accompany you to your bank, withdraw the money and then accompany them to pay it straight into their bank. This simply reduces the possibility of theft and they know you are a genuine and honest buyer. Recently there has also been a string of incidents involving counterfeit money, which this method will eliminate. Finally be sure to take a third party along with you, just for added security.

When buying from a car dealer, cash may not always be an acceptable method of payment. In general, dealers will prefer a direct transfer or of course a credit or debit card payment. Be careful if paying buy card as they may impose additional charges for this method of payment. Finally be sure the card has sufficient funds available, as overdraft charges will actually cost more than the interest charged on a finance agreement.

If you’ve arranged finance through them, this makes life very easy. The funds will simply move from the lender, straight to their bank upon completion of the deal.

Document Your Purchase

Now you’ve paid for the car, always be sure to obtain a detailed receipt. The seller will need to detail all the main facts about the purchase, including the transaction amount, the date and a detailed description of the vehicle. It sounds obvious but keep this safe, it’s what proves the vehicle now belongs to you. Remember the registration documents may detail you as the keeper, but this has no bearing on who actually owns the car. Furthermore it could help if you ever need to make an insurance claim, as the receipt will prove what you paid for the vehicle.

v5c_300200

Always ensure the vehicle has a valid tax disc and it’s clearly displayed on the car. Also, make sure you have adequate insurance before you drive away. Have this in place from the moment you complete the deal, never wait until you get home.

Finally be sure the seller, be it private or from a dealer, has included all the relevant documentation and extras, you can find out more information on this subject in our Buying a Used Car guide. For example you need the spare keys, MOT certificates, any service history and the V5C.