Buying a used car for cash - what you should know
Used cars in Germany are still often purchased in cash. This has certain advantages, but also entails risks for buyers and Seller. We have summarized the advantages and disadvantages of paying in cash for you and show you possible alternatives.
Germans love their cash. This fact is particularly evident in an international comparison. There was a huge outcry in Germany when changes were made to the beloved cash holdings. When the Bundesbank stopped issuing the EUR 500 bill in April 2019, many feared this was the end of cash. Even if this assumption is unfounded, the question arises - what are the advantages and disadvantages of cash? The purchase of used cars in particular is symbolic of the use of cash. This article shows why cash is still relevant when buying a used car and what disadvantages it has for the various parties.
The value of cash for used car dealers
Why does cash payment still play such an important role in the used car trade today? The great advantage of cash is the possibility of making the sale step by step. This means that the purchase price is paid immediately after the documents and keys have been handed over or vice versa. This means that neither party, the buyer and Seller, takes any risk. Unlike bank transfers or the use of PayPal, there are no additional costs for the used car dealer or the buyer when selling with cash. The use of cash also plays a psychological role. The feeling of holding the cash in your hand immediately after the purchase is probably another reason for the popularity of this payment method.
"Only cash is king?" - Risk in the B2B used car trade
Like some other sectors, the car trade is strictly monitored by the state. This restricts the possibility of selling for cash. For example, dealers must fulfill special due diligence obligations for cash amounts of more than EUR 10,000 per customer per year. Only jewelry retailers are even more strictly regulated, with a limit of EUR 2,000. But what does this mean for retailers in practice? It is best not to accept cash payments, as the due diligence obligations are difficult to fulfill and Seller faces fines of up to EUR 1 million. For example, according to the law, Seller must keep a copy of the ID card for 5 years and continuously monitor the business relationship with the customer. Furthermore, extracts from the commercial register and other information must be obtained and continuously checked for commercial buyers.
It is not without reason that the legislator has introduced these strict measures. In addition to general risks such as tax evasion or money laundering, Seller is also exposed to the risk of counterfeit money. Furthermore, the clean handling of cash in the company is associated with additional costs. In addition, there is the negotiating leeway created by cash payments, especially in the used car trade. The most serious problem for Seller is that many buyers use this leeway for inappropriate renegotiations shortly before the contract is signed.
Modern payment processing for the purchase of dealer vehicles
So how can buyers and Seller process a payment securely? The solution is payment processing via a sales platform. Some digital sales platforms for B2B used cars offer payment processing themselves. COSPay, CarOnSale's payment processing solution, stands out because it offers retailers transparency and complete security. With the help of such solutions, both buyers and Seller can follow the current status of the payment live. In addition, payment processing via the platform enables targeted dunning management. CarOnSale thus saves Seller the administrative effort.
COSPay offers a particular advantage in combination with express collection. In this case, the buyer can collect the vehicle just two days after payment has been made with maximum payment security. At the same time, this greatly reduces the number of days the car has to be parked at Seller and also guarantees processing and payment security.
If you are interested in COSPay or other CarOnSale services, our team will be happy to assist you personally at 030 31196400.
