Buyers and sellers both face several considerations when conducting a car sale. Parties must make sure all the necessary paperwork is in place and that they close the deal properly. Independent sellers must be careful to ensure they receive the proper payment for their vehicle and avoid liability if the buyer crashes right after receiving it. On the other hand, buyers must be careful that they receive the vehicle title (the pink slip) or a bill of sale. The presence of these two documents will ensure that the buyer can register the vehicle in their name.
When transacting with a party you don’t know, you will need to take some additional care to protect the rights of both parties. For this reason, marketplaces will recommend buyers and sellers use a car and vehicle escrow service. It’s true, the transaction may vary slightly depending on the geographical location, but the outline will be fairly similar regardless.
Conducting Cryptocurrency Transactions
Ultimately, cash is one of the easiest ways to collect payment. But, this is not always feasible when your buyer is not geographically close to you. Many consider it unwise to accept a promise of future payment from a buyer, even if you know the person. A cryptocurrency escrow service can help you transfer large sums of money across borders. Digital currencies run on blockchain technology which produces immutable transfers of money between one party to the next. Even if the party doesn’t plan on holding cryptocurrency, today’s exchanges make it easy to transfer between fiat and digital currencies. It is often the transfer from bank to bank, which can be a lengthy and complex process.
That said, escrow services are popular with both fiat and digital currencies.
Escrow Services Protect Car Sellers
The escrow service will verify that the buyer will pay these funds and transfer them to you when they receive the vehicle. Many escrow services also work in conjunction with a marketplace; allowing you to list your vehicle, find a seller and take advantage of escrow services from one platform.
From the seller’s point of view, we can break down the process as:
- Seller lists vehicle. Although optional, a seller might create an account on a marketplace, provide photos and details about their offering and wait until they find an interested buyer.
- Buyer and seller agree to transaction details. The buyer and seller will determine the terms of the agreement, including which escrow service they will use; the price and the day the liability switches from the seller to the buyer (often when the buyer accepts the vehicle on arrival).
- Escrow service accepts buyer’s funds. To ensure the buyer possesses the funds they say they do, they will transfer the amount to the escrow agent. The agent will let the seller know that the funds are legitimate and they are holding it in trust. Sellers must also provide proof the title of the vehicle is in their name.
- Seller sends vehicle. The seller transfers the vehicle to the buyer. They will also provide any information about this process to the escrow agent and the buyer.
- Seller receives payment. After the buyer accepts the vehicle, the seller receives the payment held in trust. The buyer then becomes liable for the vehicle and any accidents that might follow. The seller will also provide the bill of sale as a receipt for the transaction.
The bottom line is that using a neutral third party will help protect sellers from fraudulent cheques or other money order scams. It is a guarantee the seller will get paid for their vehicle. It is not uncommon for buyers and sellers to make verbal agreements without follow-through in the vehicle selling industry, forcing them to relist. These inconveniences are greatly reduced with escrow services, further adding to their appeal.
Escrow Services Protect Car Buyers
As a buyer, one of the biggest concerns is not receiving the vehicle in the condition the seller presents it or the legal proof that the car belongs to them. The escrow process for buyers is similar to the one listed above, although a couple of key points are worth noting.
- Buyer finds vehicle. As the vehicle purchaser, you might choose a marketplace that uses escrow services for buyer protection or engage with an independent seller. It is important to do your homework, consider the market value and ask questions about the vehicle’s history. Vehicles listed on a marketplace with escrow services will also manage the title transfer.
- Test the car during the inspection period. To ensure the vehicle is exactly how the seller advertised, buyers are encouraged to inspect the car either independently or at a mechanic during the time allotted. A test drive may also help to reveal the condition of the vehicle.
For these additional reasons, buyers gain the added protection of knowing their vehicle is in good condition and they are getting their money’s worth.
Selecting Your Escrow Service Provider
To protect both parties, it is important to use a trusted escrow provider. Background research might include checking with the Better Business Bureau or other trusted parties in your area. You might also want to consider if the business has obtained the necessary licenses to operate. Buyers and sellers can find information on these legalities in the website footer. Although the research might require some extra time, it will guarantee that your transaction occurs without any mishaps and both parties are adequately protected.
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