Paying for a vehicle

Introduction

Paying for a vehicle in this day and age is quick and easy, right?

Only if you're prepared.

Table of Contents

Ways you (usually) can’t pay for a vehicle
Ways you might pay for a vehicle
Our recommended vehicle payment method
Payment timing and security

Before we talk about the preferred methods for international travelers to pay for a vehicle, let’s talk about the ways that they (usually) cannot pay for a vehicle, and why.

Auto dealers typically don’t accept payment in full for a vehicle via a credit or debit card, for a couple of reasons.

First, credit card networks such as Visa and Mastercard charge merchants (like auto dealers) 3-5% of the value of each purchase. If an auto dealer doesn't pass this on to you, this cost will reduce (or maybe eliminate) their profit on the vehicle.

Second, purchases on cards can also be disputed or reversed. If you pay for a vehicle with a card and drive it away, the dealer may not have any protection against you claiming fraud to your credit card company and reversing the charge.

While dealers don’t typically accept cards for payment in full for a vehicle, they almost always accept cards for deposit payments on a vehicle.  In these situations, the deposit amount is a fraction of the vehicle’s full cost, so the card processing fees are much less significant, and the risk of charge dispute or reversal is much lower, because the dealer hasn’t let the vehicle leave its property.

While most dealers don’t accept cards, a handful are willing to take the risk for customers who will pay the additional card processing fees.

Considering buying a vehicle from a private (non-dealer) seller, individuals usually don't have a way to accept credit or debit cards.

So if you were planning on paying for your vehicle with a card, you should probably make other plans.

The most common way to pay for a vehicle in the US is with a Cashier's Check. This is a special type of check issued directly from a US bank that cannot be reversed.

Cashier's checks are a very secure way of accepting payment for a vehicle because they are guaranteed by the issuing bank, not the purchaser's account.

Payment with a cashier's check hits the recipient's account immediately and cannot be reversed by the payor.

If you don't have a US bank account, you probably can't get a cashier's check to pay for your vehicle.

An increasingly common way to pay for vehicles in the United States is via social payment apps like Venmo and Zelle.

However, as of the time of this writing, these services are only available to people with a US social security number.

Money talks.

If you bring cash, money orders, or traveler's checks in an amount exceeding $10,000 into the US, you must declare it upon entry.

You can also withdraw US dollars from an ATM using a debit card linked to your home bank account.

Banks usually impose daily and/or weekly limits for cash withdrawals, so it may take some time before you're able to pull out enough money to purchase your vehicle.  If you plan on using this method, be sure to call your bank ahead of time and let them know that you plan on withdrawing a large amount of funds from a foreign ATM.

Keep in mind that your bank will probably exchange your funds for dollars at an unfavorable exchange rate, and your bank and/or the bank linked to the ATM may charge you transaction fees.

Nowadays, almost every person in the US has a Paypal account. This can be a good option to pay individual sellers, but relatively few dealers have Paypal accounts.

Before transacting, check the fees that Paypal charges for sending funds from your home currency to a seller in US dollars.

You might consider a bank transfer to pay for your vehicle, but this method can be difficult.‍

The US banking system moved to electronic methods when the Automated Clearing House (or ACH) system was introduced in 1972.  Being one of the first banking systems to do so, ACH is one of the oldest electronic banking systems in the world*.*  A lot of inter-bank settlements are still done by fax, by example.

The banking system in your country (whether its IBAN or something else) is likely decades newer than ACH - and it almost certainly doesn’t automatically interface with ACH.

Sending a wire transfer into or out of the United States might be one of the most stressful things you ever do - the transfer process can take as long as 7-10 business days, and while it's happening, neither your bank nor the receiving bank will be able to tell you where your funds are.

Besides being slow and opaque, traditional bank transfers can be expensive.  While your bank may advertise international transfer rates of $25 or $50, the exchange rate that they apply to your transfer will likely be favorable to the bank (and unfavorable to you).

The two problems with traditional bank transfers are their cost (unfavorable exchange rates) and their speed (very slow).

Wise, our recommended payment method, solves both of these problems.

When you Google the EUR/USD exchange rate, for example, you see the mid-market rate.

When you make a traditional bank transfer, however, the bank doesn’t apply the mid-market rate.  Instead, it applies a rate that’s much more favorable to the bank than the mid-market rate, and keeps the difference.

The difference between the bank’s rate and the mid-market rate may only be fractions of a percent, but when you’re transferring enough money to buy a vehicle, those fractions can add up to a lot of money.

Wise, on the other hand, applies the mid-market rate to your international transfer and adds a transparent fee, so you know exactly how much the transfer will cost you.

And transfers with Wise can be up to 3x cheaper than traditional bank transfers.

When you make a traditional bank transfer from a German bank (in EUR), for example, to a US bank (in USD), the transfer must be passed between multiple banks, in different time zones, using different systems.  The process can be frustratingly slow.

Instead, Wise has bank accounts in Europe and the United States (and in many other parts of the world) that can quickly and easily communicate with each other.

When you use Wise to pay for a vehicle in the US from the Eurozone, for example, you simply open a EUR Wise account and a USD Wise account.

When you make a transfer from your EUR Wise account to your USD Wise account, Wise applies the mid-market exchange rate and credits your USD Wise account instantly.

At the end of each weekday, Wise consolidates all of the EUR to USD payments and all of the USD to EUR payments on its platform and transfers one net amount to itself.

This is how Wise can transfer money internationally so quickly and cheaply.

Using Wise to buy a vehicle in the US takes a little bit (but not much!) planning ahead of time.

Wise is a regulated banking platform, so they need to verify the identity of all users before they can start sending funds.  Verification can sometimes take a couple of business days.

Like any financial platform, Wise has to be constantly on the lookout for fraud.  A trademark of fraud is speed - someone sets up an account on Monday and then tries to transfer a huge sum of money on Tuesday.

Transactions like this, even if they’re not fraudulent at all, may get flagged for review and delayed, which can screw up your plans.

So plan your transfer ahead of time, perhaps doing it in batches.  This will ensure that any payments that get flagged for review don’t hurt your schedule.

But what if you transfer funds into your Wise account and find a vehicle that costs less than you planned?

Easy - get a Wise debit card and spend your US dollar balance while you'e in the US, and top it up when you need more!

Once your funds are in your USD Wise account, you can transfer them to the seller using a domestic ACH transfer.  Domestic bank transfers within the US usually take one business day, as opposed to 7-10 business days for international bank transfers into the United States.

And if you want to sell your vehicle at the end of your visit, using Wise to accept the funds and transfer them back to your home currency will probably be your most cost-effective option.

So go ahead, set up a Wise account now.  Not only is it the fastest and cheapest way to send money internationally, it’s free to set up an account.

As described above, a common way for Americans to pay for vehicles is with a cashier’s check.

Introducing another piece of paper into the payment process doesn’t seem very efficient, so why is it done? For security, as this allows for payment and title delivery to happen simultaneously.

A vehicle’s official ownership document is called a title, and vehicle ownership transfer requires handing the properly signed title to the buyer.

US domestic bank transfers don’t happen instantly - they take about one business day to hit the recipient’s account.  This can expose buyers and sellers, especially non-dealer buyers and sellers, to risk.

If you’re buying your vehicle from a dealership, you can be confident that, if the dealership signs a contract with you and provides their bank details, they will deliver the vehicle’s title to you after your money hits the dealership’s account.

Dealership laws in many US states allow dealers up to 30 days to deliver a vehicle’s title to a buyer.  This allows dealers time to pay off a loan on a vehicle that they took as a trade-in from another customer, for example.

But dealership laws often impose hefty fines on dealers that do not deliver titles within the legally required time period.  And if done too frequently, the state can revoke a dealership’s license or call its surety bond.

And in this age, when everyone has a megaphone, dealers know that customers can potentially hurt their reputation if they fail to deliver a title on a vehicle that they sold.

In short, dealership laws and dealers’ interest in maintaining a good reputation protect you when buying a vehicle from a licensed auto dealer.

But if you’re buying a vehicle from a private party - who doesn’t have a license, bond, or reputation at stake - you may want to exercise a bit more caution.

Here’s a hypothetical scenario that may start to explain the risks involved in buying a vehicle from a private seller.

You find a car that you like on Craigslist, contact the buyer, and take a test drive on a Saturday.  You love the car, and agree to buy it from the seller.  You initiate a bank transfer to the seller that day, but because it’s a weekend, the transfer won’t happen until Monday.  You go back to your AirBnB and make plans to check out on Monday, happy that you found the perfect vehicle for your visit.

On Sunday, another buyer contacts the seller and offers to pay significantly more for the vehicle than you agreed to, and the seller takes the higher offer.  When you call the seller on Monday to see if the payment went through, he says, “Sorry, someone else bought the vehicle.  I’ll return your funds when they hit my account.  What are your bank details?”

Now you have to scramble to find accommodation, find another vehicle, and hope that the seller returns your funds in a timely manner (or at all).

You might say, “Hey, that is risky.  I’ll just insist that the seller gives me the title before I make payment.  Or I’ll make him watch me initiate the payment in my banking app, and then give me the title.”

However, this creates risk for the seller that he may not be comfortable with.  You might show the seller that you’re initiating a bank transfer on your phone from something that looks like a bank’s official app, but is actually a fake app.  The seller doesn’t want you to drive off with the vehicle and its title until the money actually hits his account.

So unless the funds and vehicle title can be exchanged simultaneously, the buyer or the seller is exposed to the actions of someone that they don’t know, who doesn’t have a license, bond, or reputation at stake.

In the previous section, we saw how buying a vehicle from a private seller can be risky if payment and title can’t be exchanged simultaneously.

How can this problem be solved?  With an escrow agent.

In transactions that use an escrow agent, buyers send their funds to the escrow agent (which are deposited in escrow, a segregated account), and sellers send the vehicle’s title to the escrow agent.  The agent holds the funds and title until all the terms of the sale are met, ensuring that the buyer receives the vehicle in the agreed-upon condition and that the seller gets paid. This process helps prevent fraud and disputes, offering an added layer of security for all parties involved.

Our preferred escrow agent is Keysavvy, who focuses exclusively on private party vehicle escrow.  Keysavvy is a licensed and bonded auto dealership, backed by Porsche Ventures.  They have have facilitated dozens of transactions involving visitor.us customers, all of whom have given positive feedback about the service.

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