Thursday, February 14, 2008

Private Seller Transactions for Vehicle Importation: Understanding your payment options

UCanImport has indicated within the importing guide that there are several ways to seal the deal when paying for you new vehicle. Recently, we have noticed that there is a growing trend for Canadians to purchase their vehicle from a private US seller. While the importation documents and processes don't change, what may be affected is the level of comfort of seller and buyer when it comes to receiving payment or paying for the car respectively.

Payment options include:

1. Wire transfer from your bank account or a foreign exchange merchant
Excellent reliability, but little protection from a fraudulent seller. This is a good option to transfer funds for a deposit amount. You may want to note the details of the transaction directly on the memo field of the transfer. For example: deposit against VIN 12ABC34DEF56GHI78.
Keeping a receipt or screen printout that shows the seller's name and the details of the transfer are useful precautions.

2. Certified cheque or US Cash delivered in person when you pick up the car
A great option to protect both parties as you can see what you are buying and there are generally no surprises. You travel with the cheque or cash, making sure to declare it to the border officers if the value is over $10,0000. The seller delivers the vehicle and you can accompany the seller to their financial institution to deposit the funds to their account. This process is a bit more cumbersome, but it offers a greater level of security, assuming no one steals your wallet or purse.

3. Escrow services to keep the funds with a 3rd party until the vehicle is delivered to you
For a small fee, this is a great option for the wary buyer and seller. The buyer transfer funds to an escrow account, which then holds the funds for the seller until the buyer confirms that the transaction occurred successfully. Caveats: not all escrow services are legitimate, which means you have to do your homework. EBay refers its customers to to handle these types of transactions. There is a fair bit of information on the website that explains how each step of the process works.

4. In-Trust accounts through buyer and seller lawyers
Anticipate a fee if you use your lawyer's office to transact the deal with the seller. Similar to a real estate transaction a lawyer will use an in-trust account to hold funds for the buyer, and confirm same to the seller's lawyer. The funds will be transferred to the seller's lawyer to be held in-trust for the seller pending successful delivery of the vehicle to the buyer. The downside here is that you have a number of people to work with and depending on location, potentially different time zones. But the service does keep the transaction on the up and up, and for cross-border shopping sprees, does wonders for your comfort level.

Have you purchased a vehicle from a private seller? How did you transfer your money? Share your information here so that other importers can benefit from your experience.

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