What Forms of Payment Do Car Dealerships Accept?

Car shoppers can pick out their perfect car, take a test drive to ensure that it’s the best choice and be prepared to drive out of the dealership. However, until the buyer signs on the dotted line and pays for that vehicle, the car will stay perfectly parked on the lot.

Buying a car doesn’t come with a payment plan to the dealership, but buyers have to make arrangements to ensure that the dealership is paid in full. What forms of payment do car dealerships accept? Most car dealerships accept the following payment options:

• Cash

• Lender financing

• Personal check

• Cashier’s checks

• Debit card

The Easiest Payment: Cash

Buying a vehicle with cash might be the most simplistic way to pay. While many buyers might not have thousands of dollars sitting in the bank to purchase a vehicle outright, others may prefer cash payments and may have the amount they need stashed away in savings.

When paying for a car in cash, buyers might opt for the largest bills to make counting out the full amount a bit easier. Paying with cash also could be beneficial in the negotiating process. Buyers might only have so much cash on hand, and this cash might represent the budget bottom line.

However, buyers should not let the sales team see their hand; this means that buyers paying with cash shouldn’t come out and say just how much they have to purchase their vehicle. Give sales members a ballpark figure.

Some buyers just don’t want to negotiate, and they bring cash to just secure the car they want. A little negotiation is expected, though.

The Most Popular Payment:  Lender Financing

Many car buyers opt to finance their car at the dealership or through a lender. Statista reported that more than 80 percent of vehicles purchased during the first quarter of 2021 were financed.

Buyers who anticipate financing their car should have a general idea about their credit score. Consumers can request a free credit report once a year.

Higher credit scores typically lead to better interest rates. Those with poor credit scores represent a credit risk for lenders and could face higher interest rates or have more trouble securing a loan.

While car buyers can fill out a credit application at the dealership to find financing, they also can apply for an auto loan at their personal bank or credit union, too. Shopping around for a loan could help buyers find the best interest rates.

While interest rates may differ because of credit scores, loan terms also can be longer or shorter. Many auto loans are financed over five years, but some buyers opt for longer loan terms to make their purchase more affordable.

Nerdwallet advises buyers against financing for longer terms—72 months or more. The site explains that the car has negative equity immediately. Interest rates also increase with these longer term-loans.

Can Car Buyers Write a Check?

Some car dealerships accept a personal check but others might not accept this form of payment. The problem with a personal check is that it takes time to clear the bank. A car dealership isn’t likely to take the risk of a buyer driving off in a car when a payment could bounce.

To ensure that a personal check is guaranteed to pay them, dealerships might have numerous checks and balances in place when they accept a check. Some dealerships might not let the buyer take possession of the vehicle until the check clears. Others could insist on checking the individual’s credit.

Buyers who are interested in just writing out a check for their new car need to consult the dealership to make sure this is an acceptable form of payment.

Using a Cashier’s Check

The difference between a personal check and a cashier’s check is that the latter is a bit more like paying in cash. A cashier’s check is issued by the bank using the bank’s funds. The bank will then deduct the funds from the account of the customer.

For car dealerships, these ‘official checks’ may, for obvious reasons, be seen as a more legitimate and less risky form of payment. However, buyers need to check with dealerships ahead of time to ensure that this form of payment is accepted.

Private car sellers also may accept cashier’s checks. However, some sellers might prefer to finalize this transaction at the bank. This ensures that the check is authentic.

Paying with a Debit Card

Can car buyers use a debit card to pay for a car? While some dealerships are fine with accepting a debit card as a form of payment, others won’t.

In addition, car buyers can face transaction limitations when using this form of payment. Some financial institutions place transaction limitations as a form of fraud protection. Some limits could be as low as $500, and any transaction above this amount would be declined.

Debit cards are different from credit cards as they allow the transaction amount to be pulled from the account immediately. However, many banks allow debit cards to be swiped as a credit card. When swiping a debit card as a credit card, transactions remain on hold for a few days until they are verified; these holds show as ‘pending’ amounts. This provides a safeguard for account holders in case their card has been stolen or compromised.

Before considering the debit card as a means of payment, talk to the bank about any transaction limitations for debit purchases. This could save embarrassment, too!

What is the Best Way for Car Buyers to Pay for their Car?

How a car buyer pays for their purchase can depend on many factors. Some buyers don’t want to take out a loan, and they might save their money to ensure that they can just purchase the vehicle in cash without going through the process of financing.

Many car buyers want the convenience of monthly payments, and, for these buyers, the best option is to find financing. Before buying a car, consumers should learn their credit score so they can understand their credit worthiness. Again, all consumers are entitled to a free credit report once a year.

Not all car dealerships will accept forms of payment beyond cash or financing. While some might accept a personal or cashier’s check, this might not be an option at every dealership. Debit cards for payment also might not be a universal payment option; in addition, buyers who are paying with a debit card could face transaction limitations.

Every buyer might have their preferred form of payment; however, the majority of buyers opt to finance their vehicle.

Use Carzing to Find the Best Financing

Car buyers who want to finance their vehicle can use Carzing to find their favorite car and get pre-qualified for financing, too. Carzing requires buyers to enter some basic information to get pre-qualified, but social security numbers are optional.

Buyers will see all their financing options, and they can choose the best loan for their needs. Select from the lowest monthly payment or opt for the shortest loan term. Carzing also helps buyers understand how much they will need for their down payment.

Car buyers can print out a voucher with all their loan details and take it to the dealership. They can fill out a credit application at the dealership to secure their financing.

With Carzing, buyers who need financing can discover their most affordable loan options and use the site to find their ideal car, too.