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How Do You Actually Buy a Car With Cash?

I wanted to buy a car with cash, but couldn't find any information online about how to do this safely. Here's what I learned.

Can I Buy a Car With Cash?

When trying to purchase a vehicle in cash I searched high and low for an article that would tell me exactly what to do. However, none did. All of the articles told me buying in cash is a good idea, that I should check the vehicle thoroughly, to take it to a mechanic first, and how to negotiate. However, they glossed over my actual question: how do I physically get cash to buy a car?

Can you buy a car with a check or debit card?

Although dealerships might take checks or debit cards, a personal seller probably won't. They want cash. When you're buying a cash from an independent owner, that means you need approximately $8,000 in cash. I don't know about you, but I've never had $800 on me at one time let alone $8,000. Not a single website told me what to do.

My Dilemma

I just moved from state to state. I have an E*trade bank account which has always served me well in the past. However, as many know, E*trade doesn't actually have physical locations. They're an online bank. And there's the problem, because when I contacted customer support they told me in no uncertain terms that there was no way to get cash out of the bank.

Literally the only way I could possibly buy an $8,000 car with my E*trade bank account was to go to an ATM 16 days in a row and take out $500 each time.

The customer support service seemed perplexed as to why no one would hand over a vehicle with the promise of a stranger's check. Further, I couldn't even use my debit card because the limit on the debit card was $1,500. Ultimately, I realized that there's no way to purchase a car from an individual owner if you have an out of state or Internet bank unless you plan far, far in advance.

So How Do You Buy a Car in Cash?

There are a few ways to do it, but they all require that you plan things in advance.

  • Withdraw the money directly at your bank. If you do have a local bank, this is your best option. You can even get a money order. Unfortunately, if you have an out-of-state bank you don't have this option.
  • Wire transfer the money. This only works at a dealership, as strangers on Craigslist aren't really likely to give you their banking info.
  • Open a new bank account locally and transfer the money. This will take 3 - 5 business days.
  • Ask a friend to cash the check, but beware—they'll need to have a good reputation and a large balance to pull this off.
All I had wanted to do was avoid the dealership. Is that so much to ask?

All I had wanted to do was avoid the dealership. Is that so much to ask?

Pros and Cons of Buying a Car With Cash

Benefits:

  • You don't have to pay as much.
  • You don't have to pay interest.
  • You don't have to go through financing.

Drawbacks:

  • What am I supposed to do, attach a briefcase to my arm?
  • Also, how do I avoid getting scammed?

Should You Buy With Cash?

Absolutely, buying a car in cash is a great idea. However, it's probably the only time you'll ever need to make a large purchase in literal cash dollars. Before buying a car in cash, you need to really think about how you're going to get your hands on physical money. I barely ever touch real money anymore—my debit and credit cards take care of all of that for me. I had no idea that I would have issues trying to get my hands on the physical currency that my bank abstractly promised me.

So How Did I Buy a Car in Cash?

I didn't. Thanks to E*trade, the deal I had worked out fell through. With an out-of-state or internet bank, there's really no way you can get cash within five business days. I had naively assumed that E*trade had some sort of provision for this situation, whereby I could get a money order sent to me, or ask for an override and withdraw money at an ATM, or run a debit card transaction for the amount of the vehicle. At worst, I thought that perhaps I could cash a check to myself. None of these were actually possible, because even opening a bank account locally required that I wait until the check cleared rather than cash it.

E*trade is Not a Good Bank

Further frustrating my efforts was the fact that E*trade kept changing its rules. At first it told me I could take out $500 at an ATM and initiate a debit purchase of $5,000. Later they told me I could take $1,000 at an ATM and initiate a debit purchase of $2,500. Finally they told me it was actually the worst of both worlds: $500 at an ATM and $2,500 on debit. Yippee.

Somehow... somehow I thought I could just get the money that I own.

Somehow... somehow I thought I could just get the money that I own.

The Take-Away

None of this would have been difficult if I had a local bank. However, online banks have been so aggressively marketed that there are many people with them. I had no way of knowing that E*trade doesn't do money orders or that they have such incredibly low limits on their purchases and withdrawals.

When purchasing a vehicle in cash, you need to get the cash out before you move ahead. Most individuals looking to sell their cars will want to sell their cars within 24 hours, especially if it's a good deal. Not having the cash at hand for three or more business days will only waste your time, as they will move on to another buyer.

Further, I figured that there had to be some sort of trick or technique to purchasing a car in cash. There really isn't: you just need to go get a huge wad of bills and throw it at someone.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

Comments

MoneyMikeMoney on October 28, 2018:

Done it twice. Once for 8k and I withdrew 8k from the bank because I didn't want to pay the $35 bank check fee. I took the cash on a train 2 hrs to buy car

Once for 20k and they for some reason accepted a personal check which i made sure of ahead of time

Maverick75 on April 04, 2018:

Have the bank send you a Bank Check for the exact amount or money transfer to the dealership.

random person on February 13, 2018:

Have a cashiers check made out to you and take to a local bank or check cashing place.

Some Guy on January 15, 2018:

I usually purchase used cars in the 6k-10k USD range. When purchasing from a dealership, I tend to get a cashiers check for 70% of the asking price, and the 40% in cash.

Example. For a 10,000 dollar asking price, I'll get a 7,000 dollar Cashiers Check, and 4,000 in cash. This allows you to negotiate down all the way to 4,000 dollars at the lowest, with 7,000 at the next step up (the cashiers check alone). Should the price end up higher than 7,000 cashiers check, you make up the difference with the cash portion. Should the original asking price of 10,000 be firm, you still are left with an extra 1000 in cash for fees, taxes, and extras.

KATHERINE M Dumont on July 26, 2017:

I received every item except for the item #431449 and is paid for. Timex Hand Black Strap Watch - T2P3929J $47.96. #431449. It also had a blue face. When will the watch be sent? My Anniversary is August 5th and I don't have my husband's gift. That's not so pleasant for me. Timex, blue face, three hands, black band. Again timex, T2P3929J $47.96 #431449 the cost be for discount $59.96. Be in touch with me 203-464-7035 leave message of date of delivery. I would want it placed on the other side of the black boxes on the front porch. TKy

Fran on August 23, 2014:

We're helping our daughter with her first car purchase today. I'm planning on using a cashier's check

Rachael on May 01, 2014:

It's called a cashier's check. It's a check that is guaranteed by the bank beforehand. You give the details (exact name of recipient and dollar amount) to the bank to fill in on the check. This is as good as paying cash and different from a personal check.

Peg Cole from Northeast of Dallas, Texas on January 09, 2014:

We've bought cars with cash a few times. It does prove to be an extra negotiating tool when the seller is wavering on a lowest price. Cash talks. There are hazards to carrying that much cash around, though. It would be advisable to purchase traveller's checks and sign them over to the seller. Also, most reputable car dealers will have ways to authorize a bank draw from your account along with the required paperwork for transfer of title, etc..

SpaceShanty from United Kingdom on December 28, 2013:

I think they mean paying upfront via bank transfer or check, ie not with credit, I don't think you have to walk in with a wad of cash! But then i am in the UK so might be wrong. I have bought and sold cars via eBay and Gumtree (like craigslist) with cash but we have a big 'second hand' selling culture here in the UK.

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