I have seen a few roomers querying the risk (or otherwise) of accepting cheques/drafts for car sales.
I quote below the new rules which came into force in November last year: Mind you, I still wouldn't accept one, even taking para three into account.
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The UK banking industry has announced the start date for changes to cheque clearing processes.
The changes, known as 2-4-6, are a major development that will benefit anyone who accepts a cheque, banker?s draft or building society cheque. The changes will apply on all cheques paid in to major banks and building societies in the UK with effect from Friday 30 November.
For the first time, after paying in a cheque, customers can be sure that at the end of six working days, the money has safely cleared and they are protected from any loss if that cheque should subsequently bounce.
The changes set maximum timescales for the day that customers can expect to earn interest, or when the balance on which overdraft interest is charged is reduced. This will be no later than two working days after paying in a cheque.
Customers will be able to withdraw money no later than four working days after paying in a cheque under the new maximum timescales. Banks and building societies will still compete to offer services that beat these guaranteed limits.
Certainty and clarity
In research commissioned by the Cheque and Credit Clearing Company, less than a quarter of cheque users surveyed knew the correct timescales for cheque clearing, and more than half were worried about accepting cheques for fear they may bounce.
The 2-4-6 changes address these uncertainties, and provide guaranteed maximum time limits on cheque clearing to help businesses and personal customers decide how best to manage the cheque payments they receive.
Angela Thomas, Cheque and Credit Clearing Company Managing Director, said, ?Although cheque use has fallen over the last few years, cheques remain important for certain customers in certain situations. Whether it?s a small business or someone selling a car, there are many occasions where cheques still get handed over. These changes will really benefit anyone paying in a cheque, offering them certainty and clarity on when the money has cleared and giving real peace of mind.?
Despite the positive change, the industry continues to remind customers to be wary of accepting cheques if they don?t know or trust the person offering them the cheque. Other options include CHAPS or making an online or phone payment.
Downloadable advice guides
Any customer who is uncertain about clearing timescales for a particular cheque should check with their bank or building society.
The Cheque and Credit Clearing Company and APACS have issued downloadable advice guides and a range of information for personal and business customers, available free from their websites, to explain the changes.
These changes cover cheques, bankers? drafts and building society cheques drawn on and paid into a UK current or basic bank account. For saving accounts the maximum time limit for withdrawal is longer, six days instead of four.
Basic bank account holders are likely to be able to withdraw cash more quickly than before as a result of these changes. Small businesses will benefit from the certainty of funds for managing their cash flow, and for deciding when to release goods and services that are paid for by cheque.
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Any cheque can be stopped - including one issued by a bank/building society.
The only safe way is to be certain any paper payment has cleared before releasing the goods.
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Any cheque can be stopped - including one issued by a bank/building society. The only safe way is to be certain any paper payment has cleared before releasing the goods.
Cash is the only safe way, in used low-denomination notes.
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CHAPS is just as safe, and you won't risk being duffed over for the money by some low-life.
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For even more peace of mind, go with buyer of car and ask them to withdraw cash for full amount and then pay cash straight back into your account, in presence of bank teller. If necessary, open a bank account at the seller's bank so it's an internal transfer, the cash in notes really exists and you have witnesses, CCTV cameras, the lot.
But don't try this in Nigeria.
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It's amazing (to me) that I can't go to any branch of any bank, with my debit card, and say "I'd like to deposit £XXXX.YY into account 12345678" "yes sir, enter your PIN", "thank you and goodbye".
In the case of a car purchase it would be so easy just to go into the seller's branch, with the seller, do the deal in front of them, give them a copy of the bank's transaction receipt, and take the car keys. Why do I have to carry in bundles of cash?
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For even more peace of mind go with buyer of car and ask them to withdraw cash for full amount and then pay cash straight back into your account in presence of bank teller. If necessary open a bank account at the seller's bank so it's an internal transfer the cash in notes really exists and you have witnesses CCTV cameras the lot.
Please correct me if I'm wrong, but you can pay money in at any bank?
Apart from the opening of a new account, the process you've described is one I've often written, having been advised of it by a bank employee. The point of withdrawing the cash and paying it back in is that it isolate the 2 transactions so it can't be easily reversed, like an electronic transfer can.
The money could still be recovered if it turns out that the buyer was stealing it by accessing someone else's account, but recovery would be much more complicated, involving a court order, than simply taking the money back off you.
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Any cheque can be stopped - including one issued by a bank/building society.
Not once it's cleared - that's the whole point of these changes. There is now "certainty of fate".
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For £35 you can do an electronic bank transfer. If you stand there with the buyer in his bank, and watch the transaction go through, you cannot go wrong.
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A CHAPS transfer costs £25-35, as you say, but it has to be initiated from the account-holder's bank - now in the town we have no HSBC, for example, so if I sold a car to an HSBC acct holder, we'd have to drive six miles to the nearest one. Not a huge deal, but it could be much more in more rural parts.
Most people use a local branch, so the facility to go into their branch and do the whole thing off the card would be good. A debit card transaction is PIN protected, and not very easy to reverse, as the transaction process checks the availability of funds, and earmarks them for the specific transaction.
Edited by oldnotbold on 29/02/2008 at 16:45
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