Is it safe to accept cash when selling a car?

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Sellers often view cash as secure and easy, the simplest and safest way to accept payment when you sell a car private party. The buyer gives you cash, you give them the title--what could be easier? What could go wrong?

In reality, cash is inconvenient, and it isn't as safe as people think. There are modern, safer alternatives to cash for private party sales. Still, it is possible to safely accept cash when you sell your car, as long as you take some precautions.

Why is accepting cash risky?

For the seller, there are two main risks associated with cash:
  1. Some or all of the cash could be counterfeit.
  2. The cash can be stolen or lost before you deposit it in your bank.

It's easy to dismiss both risks as "rare" and "exceptional", but when tens of thousands of dollars are on the line, you don't want to be the person saying "I never thought it could happen to me".

Counterfeit cash is harder to spot than you think

You might assume that a counterfeit-detection pen is all you need to detect fake bills. Or that you can simply hold each bill up to the light to examine the watermark. While that sometimes works for the least sophisticated counterfeits, counterfeiters are very clever and can easily defeat amateur counterfeit detectors.

Counterfeit-detection pens in particular can lull you into a false sense of security. The Division of Financial Affairs at Cornell cautions:

The Secret Service and U.S. Treasury do not recommend relying solely on a counterfeit-detection pen of the kind that you often see clerks use in stores. These pens can only indicate whether the note is printed on the wrong kind of paper (they simply react to the presence of starch). As such, they will catch some counterfeits, but they won't detect more sophisticated fakes and will give false-negatives on real money that has been through the wash.

Even if you familiarize yourself with more advanced counterfeit-detection techniques for modern bills, you'll frequently encounter older bills that are easier to counterfeit.

If you do want to take the time to become an expert at detecting counterfeit money,this pamphlet from the Secret Service is a good place to start. The Federal Reserve also publishes an app called Cash Assist to help people learn the security features embedded in cash, though the app itself cannot detect counterfeit money.

Verifying the watermark on a $100 bill

Beware loss and theft

The risk of theft is mostly self-evident: When you carry thousands of dollars in cash around, somebody might try to take it from you. Yes, people do get mugged in broad daylight and in public places--even right in front of their bank.

The risk of misplacing thousands of dollars might seem low, but consider this: A stack of $10,000 is only one inch thick and will fit inside a small envelope. Though theft is a bigger concern, don't dismiss the possibility that you could simply lose, drop, or misplace the cash before you get to your bank.

Why is cash inconvenient?

At a minimum, accepting cash requires two trips to the bank: the buyer to withdraw the cash, and you to deposit it. If you or the buyer use an online-only bank, it's simply impossible to withdraw or deposit large amounts of cash. You have to use another payment method.

How to safely accept cash

The easiest way to protect yourself is to meet your buyer at a bank and have the teller count and verify the money for you. Banks have machines that quickly and easily detect counterfeit currency. The best place to meet is your own bank, so you can deposit the cash in your account immediately.

Conclusion

If your buyer insists on paying cash, you should meet at a bank so a teller can verify the funds (and, ideally, deposit them in your account immediately). If the buyer refuses to meet at a bank, treat that as a dealbreaker.

Like cashier's checks, accepting cash safely is limiting: You have to meet at a bank during banking hours. If you or your buyer can't or don't want to meet when your bank is open, consider more convenient alternatives like KeySavvy to verify the buyer's funds and guarantee you get paid.

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