Paying for the car.

The joys of exchange rates and money transfers.

I'm starting to realise you why people pay more for a car already in the country! If its not hard enough having to find a car that fits your requirements,not to mention your pocket, then it seems to be even harder to avoid the banks creaming off some of this hard earned cash in the process.

Now that I have agreed a price for VIN#10719 I first had to pay the $1000 deposit to secure it. This was agreed to be done through PayPal. Now, don't get me wrong, PayPal can be very useful. Its great when you buy something on ebay, click on the PayPal button, and hay presto it's all done! But, as anyone who's has been on the other side of that equation knows the charges that PayPal places on transfers can seem steep, especially when your sending over $1000, not to mention more than that. PayPal will charge the person receiving the money between 1-3% of the total. That's after taking a slice of that money by providing a greatly reduced pound to dollar exchange rate. For example, when I sent over my £1000 deposit the exchange rate was 1.6 pound to the dollar, but PayPal's rate was a measly 1.55. So through Paypal I paid £645 for $1000, whereas the actual pound to dollar rate would have been more like £625. That's £20 fees straight away! Add another 1-3% on top of that paid by the receiver of the cash, another £10-30, and you could be looking at £50 to PayPal. Not cheap.

When it comes to paying the rest of the money it gets even worse. Most banks again have terrible exchange rates for their customers. My bank, Lloyds TSB here in the UK, offered a dreadful 1.54 dollars to the pound! If I was sending over £10,000 to the USA that would be a charge of £600 compared with the actual market rate of 1.6 dollars to the pound. They even have the nerve to charge £17.50 for the pleasure if you do it online, and £35 if you do it in branch or on the phone! They should be wearing a mask as that's daylight robbery!

So, whats the solution? Well, don't use your bank or PayPal for a start. PayPal is good for a deposit. Its quick and easy, and if you use a credit card your probably covered for the total amount if it all goes tits-up (but check with your individual card provider, not all are the same). Remember your sending a big lump of cash over to pay for a car you've never seen, and to a seller you don't know. Madness in any other circumstances. To send the rest of the cash look around for a good rat of exchange. Plenty of companies specialise in this type of thing and give FAR better rates. Sites like http://www.sendmoneyhome.co.uk/ are really useful to compare money transfer companies. I used http://www.torfx.com. It was quick and easy to open an account online, and a dealer called me directly back to discuss my needs. He guided me through the process before offering me 1.5982 dollars to the pound. That's £499 cheaper than Lloyds TSB (with the online fee added) on £10,000.

Finally, the time taken to do the transfer. Lloyds TSB quoted at least 4 days to transfer the money. TorFX did it in just over 48 hours. Many sellers request payment in full within seven days, so the time delay incurred by using a bank can ruin everything.

In short, shop around, its worth it. The money saved will pay for more parts when the car finally gets over here.