Hi
I have sold my car and the buyer wants to pay with a bankers cheque. Is it safe to hand over the car or should I wait for this cheque to clear?,,,is there any chance of fraud with this type of cheque?
Thanks for any comments
alan
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Definitely wait for the draft to clear! The person giving it to you could make a swift mobi call to the bank to cancel it or worse, it could be a fake.
If you want to ensure payment, arrange to pay an immediate clearance fee with your bank then let the buyer take the car. I'd never let anyone take possession of my car immediately unless they were paying with nelsons.
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A (genuine) bankers draft is only obtainable against funds, and it's not possible for the buyer to 'ring the bank and cancel it' after they have handed it over. It must be returned to the bank for cancellation and return of funds to their account.
Regards
John S
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True John, but....
Recently it happened to us where a bankers draft we were using to pay for something was stopped by the bank itself due to "finger trouble" in their internal computer systems. ie cheque said amount X, (correct) computer said amount Y (wrong)!
Think Northern bank beginning with H, not too far Huddersfield,
;-)
(before moderators start having fits I've got more documentary and witness evidence than you could shake a stick at, more than willing to have my day in court)
Of course to compound the error the idiots in the bank didn't do anything, did not tell anyone, did not return the funds, nada just refused the cheque. Was the air blue! It cost them in compo mind.
Having had that experience I'd get clearance everytime. How much is priority clearance these days?
regds,
Stuart
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Stuart
Yes, I suppose such things can occur, but it should be rare. The point I was making was that the advantage of Bank or Building Society cheques is (if they are genuine) they equal cash and that the person handing them over cannot ring up and cancel them over the phone, as they can with a personal cheque.
Regards
John S
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I hope this helps. Coincidentally I sold a motorcycle in UK last week for a considerable sum. I requested a banker's draft in payment, and instructed my storage provider who was handling the sale to call, in the presence of the buyer, the issuing bank for confirmation it was a valid cheque drawn on their bank against supporting funds and that it would clear on presentation, before handing over anything.
A baker's draft has to be raised against good funds in the first place since it is effectively a cheque raised by the bank itself.
On confirmation that it was, he handed over the bike and banked tghe cheque for me. Clearance time I am told is the same for a normal cheque, and I received an email from my agent to that effect shortly after.
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>> A baker's draft has to be raised.....
To enable you to be given the bread :o)
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Unfortunately you need to take some precautions with a bankers cheque these days. There are a lot of forged and stolen bankers cheques around. Ideally wait for it to clear before handing over the car. Alternatively do the transfer during normal banking hours and look up the issuing bank's phone number yourself and phone them to check its validity. I don't know whether this is still possible nowadays due to the perfidious call centres. Alternatively the only other thing I can think of is for both of you to visit the bank direct and actually witness the hand over of the cheque from the bank.
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These days I should have thought it's not too difficult to arrange electronic funds transfer, just like a solicitor does when you're buying a house. Otherwise - take HJs advice.
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Some building societies print a phone number on the cheque so you can check it. (Abbey National do).
I would arrange to meet the purchaser at a bank and then do a electronic transfer.If you bank at the same bank then this will cost nothing (unlike a bankers draft) and the funds will clear immediately.
If you have differents banks this will cost between £10 and £25.
I'am never comfortable seeing someone drive off in my car while i'm left with just a piece of paper. ;-)
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You may see, from time to time, adverts in the papers saying that there has been a robbery at a building society branch and that cheques numbers %%%%%%% to ??????? have been stolen. This may be deemed to be sufficient warning to you to know that such a cheque, presented to you in payment for something, is in fact stolen. If you haven't seen the advert that may be taken to be a problem for you and not for the issuer. Be warned and heed the good advice above, from others.
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Bankers draft. Expensive and time consumimg to arrange. Should be as good as cash if it is real. How do you know? Yes you can call the Bank but there is unlikely to be anything recorded and if there is subsequently a problem then its your word against theirs. Yes you can tape the phone call but given all the hassle would it not be better for both sides to just wait for the cash?
Building Society cheque. Supposed to be copper bottomed but too many examples of the Building Societies hiding behind any excuse they can think up. If there is a problem its you against their legal department. Avoid.
Electronic transfers. BACS expensive, CHAPS ruinous and if it involves currency exchange as well just plain crazy charges. Not necessarily fast either, and have a habit of getting lost.
Cash as always is king but why not an ordinary cheque and then wait for it to clear? Cheap, easy and in 99% of cases there is no real reason why you can not wait three business days.
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Thommo is right, cash is king. That is all I will ever accept for a purchase of anything leaving the gate here.
Bankers/B.soc cheques are no better than ordinary cheques in these circumstances, the bottom line is you don't know *absolutely* they are OK until they have cleared in two/three days.
I'll never wait for an ordinary cheque to clear either. Why? Because the chap could change his mind on day two and stop the cheque....giving you all the hassle of selling the thing again.
David W
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Agree cash is king, but you risk a 'visit'.
In the past I have accepted Building Society cheques provided I can take a look at the pass book to check that the money has accually been taken out of an account. Remember one lady covered the entire page with Post It notes, other than the line I was interested in, as though I could give a #%&** how much she had in her account.
Chris M
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Once accepted a bankers draft in good faith, but unfortunately it had been stolen 4 years before and was refused. Fortunately got our money back and the bloke went down for 4 years.
Moral of the story is cleared funds.
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Take care........my local Dealer got ripped off big style on a forged Banker's draft. Also a load of forged notes out there !
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Bottom line is, you just don't know how honest (or dishonest!) someone is handing over a bankers draft.
As for inspecting the buyer's bank \ BS passbook, what's to stop them forging that?
Don't really agree with electronic transfer charges being excessive. For my car import business I recommend an electronic transfer and the banks only charge £15 for same day transfer. When you are talking about transferring upwards of £5k, I don't see that as excessive.
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Have you ever seen anybody do a BACS/CHAPS transfer? You pull up the screen, type in the numbers and push a button. The automated banking system is fully in place for their own purposes already so the marginal cost to them is... nil. £15 profit for 20 seconds work, not bad. Times 1 million + time a day, now you know why the banks are making huge profits.
For businesses, for whom they make extortinate charges already this service should be free.
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Some good points raised so far...
I think the rule of thumb is do not hand over the keys until the money is cleared.
Remember cheques take 5 working days to 'clear' not three and a special clearance request will not 'clear' the cheque any quicker but will only confirm the cheques validity.
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I agree £15 for a few seconds work is expensive. But that's not the whole story is it as well you know?
If you want a quick, safe, reliable transfer of money, paying for the express or electronic transfer IS worthwhile for sums over £5k.
And it's not the one off £15 fee that cripples business' its the 60p for this, 60p for that on every transaction that banks charge business'.
I know, I have to pay them!
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I have just been stung by stolen bankers cheque - no car and no money (£8500). I feel sick. Should have read this thread first.
The bankers cheque was accompanied by a bank till receipt with appropriate details i.e. date / time / account numbers which all checked out OK.
Out of interest, how did you get your money back CM? Was it specific to the guy being caught or from the bank? Is there anything you know that would help me?
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Just a thought,but wif you were buying a car from somebodys house would you want to hand over a cheque for full payment and then wait for them to clear it?They could just as easily leggit with your money.
Also theres lots of fake money out there,who can reliabily spot it everytime?Bit of a mine field really.
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Quite so. We bought a nice used 205 for my daughter about 10 years ago from a family about 80 miles away. They accepted a banker's draft but insisted on keeping the car until it had cleared - until I pointed out that they then had both the car AND the money, implying that trust is a one-way commodity. In the end, there is always a risk with a transaction involving several £grand - one just has to choose the safest method and hope for the best.
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I guess I'm just unlucky then. But I'll never buy or sell privately again - some dealer will always make a few quid from me - shame really.
I received a letter from the bank that the cheques were stolen from today. On explanation of what they have done since the cheques were stolen.... "It is not standard practice for the media to be contacted with information such as this". Thanks for letting us know then! b***** bankers.
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I guess you can't claim against car insurance seeing as you voluntary gave the keys to someone, but aren't the bank prepared to offer some compensation?
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I think there'd be a valid claim in this case - the car's been 'stolen' after all. A bankers draft was accepted, and evidence sought that it was genuine, what else can you do to take reasonable care? Still leaves you out of pocket to the tune of the excess and loss of no claims / increase in premium -but probably less than £8.5k.
Some people......
Richard
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Most insurance does not cover fraud and deception. Well, I know my doesn't anyway.
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Really sorry to read about your loss ouchie !!
The banks attitude reminds me of that displayed by the Royal Mail when, a few years ago, it transpired that our postie had been robbed and some of my mail had been stolen. I only found out weeks later when I got a series of calls from very angry customers claiming they'd sent me orders/cheques but had no reply. It was the first I knew of any problem so was very surprised to be told by a RM representative that they don't inform customers who've been the victims of such theft since it encourages fraud on their part !!!!
I see, you lose the mail and then don't tell those who are affected (e.g. people who've lost passports, valuables, hospital appointments and other important documents or items) thereby depriving them of the opportunity to take some form of action to mitigate their loss ! Better still, some will never know what they've lost and won't therefore be able to chase you for compensation !
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Regarding bank charges, BACS is usually free for individuals and CHAPS is normally £20 regardless of the amount.
Hardly "ruinous" as a percentage of the transaction cost unless its a very cheap car in which case cash will probably do the job.
If you do use CHAPS or BACS make sure you put the car registration number or VIN number on the payment details so its clear what the money was for in case of any problems.
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ouchie the same has happened to me... did you seek legal advice? my solictor believes that i have a good chance of getting the car back because good title did not pass to the person who gave me the stolen cheque. i also believe that you should chase the bank because they have a duty of care to you as a customer.
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Not as such. I contacted the bankers ombudsman but they said it was nothing to do with them. In the end I gave up.
I agree though, the bank do have a duty of care since it was their negligence, i.e. they lost the cheque book, that led to my loss. The difficulty with the legal case is that all the official banking guidelines state that bankers drafts should be cleared before handing over the goods.
My car was recovered 10 feet out of a ditch - I received £800 for it as scrap so my loss was £7700 plus a lot of heartache.
Oh well. Give someone an opportunity and they will take it!
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Perhaps I'm not so daft trading in at a dealer after all...
Tomo
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so if my potential buyer offers to go to a bank and let me see cheque being issued im safe tia
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I was always taught to believe that a Bankers' Draft was as good as cash. I see I was wrongly taught. Sorry about your experience, Ouchie, hope you can get it sorted somehow.
HF
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