Paying for a used car: bank transfer, cash and deposits

For most private sales, a bank transfer to an account in the seller's name, made while you are with the car and the seller, is the cleanest way to pay. It leaves a record, the bank checks the name on the account, and if you are tricked into paying a fraudster you may be able to claim the money back. Cash leaves no trail and has no protection. A credit card, where a dealer accepts one, can give extra rights. Whatever you use, never pay a deposit before you have seen the car, and always get a written receipt.

The options compared

Bank transfer

Most UK bank transfers go through Faster Payments and arrive within minutes. Your bank may set a daily limit, so check it before the viewing. For a large amount, your bank may stop the payment and ask questions. That is normal and is there to protect you.

Confirmation of Payee

When you set up a new payee, your bank checks the name you type against the name on the receiving account. It tells you whether the name matches, closely matches or does not match.

• A match with the name on the V5C is what you want.
• A close match may be a typing difference. Check carefully.
• No match is a reason to stop. Ask why, and do not pay until the name, the V5C and the person in front of you agree.

Scam reimbursement rules

If you are tricked into sending money to a fraudster, that is an authorised push payment (APP) scam. Since 7 October 2024, the Payment Systems Regulator's rules have required UK payment firms to reimburse most victims of APP scams made by Faster Payments and CHAPS. At the time of writing:

• the maximum reimbursement is £85,000 per claim
• you must report the scam to your bank within 13 months of the last payment
• your bank may apply an excess of up to £100
• the bank can refuse if it finds you were grossly negligent, for example by ignoring clear warnings

The rules cover fraud, not a car that turns out to be faulty. If you pay a genuine seller for a car with a problem, that is a dispute about the sale, not a scam. Check the Payment Systems Regulator's page for the current rules before you rely on them.

Cash

Cash is still common in private sales, but it has real downsides. There is no record unless you get a receipt, no bank protection, and carrying a large sum to a stranger's address is a risk in itself. If the seller insists on cash, ask why. If you do pay in cash, count it in front of the seller, get a receipt signed by both of you and keep a copy of their ID and the V5C details.

Card payments

Many dealers take card payments, though some limit the amount or add a fee. Private sellers usually cannot take cards.

• Credit card. Under section 75 of the Consumer Credit Act 1974, if the car's cash price is over £100 and not more than £30,000, the card provider can be jointly liable with the dealer for breach of contract or misrepresentation. You do not have to pay the whole price on the card for this to apply. A part payment, such as a deposit, can be enough, as long as the car's price is within those limits.
• Debit card. There is no section 75 protection, but your bank may be able to use chargeback under the card scheme's rules. It is not a legal right, and time limits apply.

Dealer finance

Hire purchase and PCP are arranged through the dealer but provided by a finance company. Until the last payment, the finance company owns the car. Because it supplies the car, it can be responsible if the car is not of satisfactory quality, as well as the dealer.

Before you sign, read the total amount payable, the interest rate, the mileage limit on a PCP and what happens at the end. Do not let the monthly figure be the only number you look at.

Deposits

Never pay a deposit before you have seen the car. A request for a deposit to "hold" a car you have only seen online, often with a story about other buyers, is a common pattern in scams.

With a dealer, a holding deposit after you have seen the car can be reasonable. Ask before you pay:

• is it refundable, and in what circumstances
• what happens if the car fails its pre-delivery checks or the finance is declined
• can I have the terms in writing

Pay any deposit by card if you can, and get a receipt.

The receipt

Whichever way you pay, get a written receipt that both of you sign and keep. It should show:

• the date and the price paid
• the method of payment
• the make, model, registration number and VIN
• the mileage on the odometer at the sale
• the names and addresses of the buyer and seller
• any promises the seller made, for example "cambelt changed at the last service" or "no outstanding finance"

Then make sure the change of keeper is done with DVLA. Our guide to the change of keeper explains who does what. Remember that the registered keeper is not always the owner, as our guide to registered keeper and owner explains, so a history check for outstanding finance before you pay is worth doing. For the full order of steps, see our used car buying checklist.

Frequently asked questions

How should I pay a private seller for a car?

A bank transfer to an account in the seller's name, made while you are with the seller and the car, after you have checked the V5C. Your bank's name check should show a match before you send the money.

Should I pay a deposit on a used car before seeing it?

No. Do not pay anything until you have seen the car, the V5C and the seller in person. Requests for a deposit on a car you have only seen online are a common sign of a scam.

Can I get my money back if I am scammed by bank transfer?

Often, yes. Under the Payment Systems Regulator's rules, at the time of writing banks must reimburse most APP scam victims up to £85,000 per claim, if you report it within 13 months. It does not cover a genuine sale of a faulty car.

Is paying by credit card better than a bank transfer?

It can give more protection. If the car's price is over £100 and not more than £30,000, section 75 can make the card provider jointly liable. Many dealers limit card payments or add a fee, so ask first.