If you’re buying a used car from a local dealership you probably do not have to worry about payment fraud. The dealership has a physical location, plenty of cars in inventory, and a lot to lose by stealing your money. But when buying a used car from an unknown private party or dealership online, you have to be very careful. Cars cost thousands of dollars and that attracts a lot of scammers and unscrupulous criminals. Fraud in car sales is very common and you need to protect yourself when buying a car from a stranger. This is where an escrow service can help you.
What is a car escrow service?
Escrowing is when you send your money to a neutral 3rd party that monitors a purchase to make sure it’s legitimate and secure. An escrow service authenticates that money is exchanged in return for a vehicle and that neither party walks away empty handed. When buying or selling a car, I strongly suggest using a secure and licensed escrow service like Escrow.com which is the only escrow company recommended by eBay Motors.
How does escrow work for buying and selling used cars?
- First, both the buyer and seller register with the escrow company and agree to the terms of the transaction. This includes the sales price, a description of the car, and shipping information if applicable.
- The buyer then submits a payment to the escrow service.
- After the payment has been verified, the escrow service lets the seller know to ship or deliver the car.
- The buyer receives the car, verifies receipt with the escrow service, and accepts or rejects the car.
- Upon buyer acceptance, the escrow service releases the money to the seller.
The key safety measure is that the funds are not released to the seller until the vehicle has been both received AND the condition approved by you.
What does an escrow service cost?
Escrow.com charges the following for their vehicle escrow service:
|
For Vehicle amount |
Escrow Fee |
|
$0-$5,000 |
3.25% ($25.00 minimum) |
|
$5,000.01-$25,000 |
$162.50 + 0.26% of amount over $5000 |
|
over $25,000 |
0.89% |
Don’t let the seller recommend their own escrow service. There are just too many scammers out there on the Internet. If you read tips on Craigslist or eBay Motors, they will also tell you to avoid unknown escrow services, Western Union and other wiring services. Again, Escrow.com is the only escrow company recommended by eBay Motors.
Want to buy a car near (or below) dealer cost?
Get the free 10-Day Car Buying Expert Email Course
You'll learn:- How to buy a car at the best possible price (by making dealers compete)
- When is the best time to buy a car?
- How to find the best financing available (by making lenders compete)
- How to sell or trade-in your car for maximum value
