Can a Car Dealer Refuse Cash as Full Payment?

  • By: Sean Cooper

Businesses that price their products or services in dollars are required by federal law to accept dollars as payment, but can a car dealer refuse cash as full payment for vehicle purchases? Accepting “cash” doesn’t necessarily refer to accepting cash in terms of bank notes. Private entities are generally permitted to set their own payment rules.

A car dealer is perfectly within their right to refuse cash as full payment for a new or used car, but they may not want to accept hard cash for a vehicle purchase. There are reasons why a dealership may or may not want to accept cash as full payment for a vehicle, which we look at in detail in this article.

The phrase “This note is legal tender for all debts, public and private,” is printed on every U.S. bill. It emphasizes that creditors are required to accept cash for debts denominated in dollars, not that they are required to accept cash for all their purchases. Debtors are protected by the guarantee that if they have enough money to repay their debts, they may convert it into cash. Creditors may not refuse it.

However, when a car dealer or anyone else speaks of a “cash price” they’re not necessarily indicating they will let you rock up with sports bags stuffed with used dollar notes. As far as purchasing big ticket items like cars, boats, or real estate, a “cash buyer” usually refers to someone who can pay for the item outright without having to rely on finance.

Buying goods and services

According to the Treasury Department, there is no federal law requiring any private business or individual to accept cash as payment for goods or services. There is no requirement to accept cash as payment for debts, therefore.

A business can adopt whatever policy it likes within the law; they may accept cash, accept certain amounts of cash, refuse cash or checks, or only accept credit cards. That’s why a car dealership can refuse to accept cash for a vehicle purchase.

Why refuse cash?

Car dealerships that don’t accept cash aren’t obliged to reveal why, so you might not get an explanation. Security concerns, hassle, and federal paperwork requirements are just a few of the reasons why businesses might not accept cash.

It’s easy to imagine that criminals might target businesses that accept large sums in cash for car purchases, especially if they are known for it in the local area. If crooks know a dealer regularly accepts hard cash for vehicle purchases, all they’d have to do is wait for the busiest day of the month and they know they’d be in for a big haul if they robbed the place.

Banks require dealers to make multiple special trips to deposit money. In addition, businesses that take in more than $10,000 in cash must report it to the Internal Revenue Service according to federal money-laundering legislation.

In other countries, like the UK, car dealers are not even allowed to accept cash above a certain amount for vehicle purchases. In fact, they are even supposed to inform the police if a potential customer even attempts to pay more than a certain sum in actual cash.

Why accept cash?

There are several reasons why some car dealers would be happy to accept cash. The most obvious reason is you know where you are with cash and the chances of the dealership being defrauded are lowest with cash. A check can bounce, but $20,000 in cash is a guaranteed $20,000. Well, it is as long as you can tell the difference between genuine and counterfeit notes, that is.

Another reason why a car dealer, or anyone taking payment for goods or services, would like hard cash is to avoid paying tax on that money. If payment is made by finance, debit card, credit card, cashier’s check, bank transfer or personal check, that payment is easily traceable and will always show up in any half-decent audit.

However, it’s easy to make a bag of cash disappear without trace and it then becomes easy to make the whole transaction disappear from the accounts to avoid paying the IRS their share. It’s obviously a practice we can’t endorse here at carbuyingandselling.com, but it does still happen.

Cash alternatives

If a car dealership won’t accept your cash, you may attempt to locate one that will. Alternatively, you may transform your cash into a cashier’s check, a money order, or even traveler’s checks if they are still a thing.

Purchasing such “monetary instruments” might also result in an IRS report from the financial institution where you obtain them, but there is no harm as long as the money comes from reputable resources.

Why would you want to pay in cash?

Why would you want to take a bag full of cash to pay for a new or used car? If you were to get robbed, the chances of you getting any or all of your cash back are slim to non-existent, so it’s a security risk, first and foremost. Why not deposit your cash in the bank and pay by a card or bank transfer instead? It’s quicker, easier, and without risk.

There are two main reasons people want to pay real cash for cars. The first is they might be old-school and refuse to accept modern banking methods. There are older people who insist on getting paid for what they do in cash and stash it in a safe, inside a mattress, or under the floorboards.

Of course, the main reason why people try to pay extremely large sums of money in cash is that the money comes from, let’s say, a suspect source. It could have been generated by a cash-based business and tax hasn’t been paid on it as it’s never been through a bank.

And it could be worse. It could have been earned through criminal activities. I’ve had people I knew to be drug dealers asking if they could pay for a new vehicle in grocery bags full of cash.

Only recently, a friend of mine with a few used car dealerships had an Eastern European try to pay the equivalent of $90,000 for a couple of used cars in cash. The salesman politely declined the cash, and the guy asked him to drive him to the bank so he could get a cashier’s check instead. When the salesman asked why the guy wasn’t worried about carrying so much cash on him, the guy reached into his pocket and half revealed a handgun. That was inside a BANK in the UK, where the anti-gun laws are about as strict as it’s possible to get!

Don’t get offended

If you are genuine and you have a large sum of cash you want to use to pay for a car and the dealership refuses to accept it, don’t get offended. Although they may be able to accept it if they want to, if they refuse, they have a good reason and they are perfectly entitled to do so. Just accept it, don’t get offended, and find another way of paying for your new or used car.

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