Is it safe to accept PayPal when selling a car?

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Even if you're willing to pay the 2.9% fee, motor vehicles aren't eligible for PayPal Buyer or Seller Protection, so PayPal will immediately deny any disputes. If you're using the free "friends and family" option to exchange funds, the buyer's payment could be reversed and the seller would be responsible for returning the funds to PayPal. It's not safe for the buyer, either, since PayPal doesn't make any guarantees that the seller actually owns the vehicle and the title is clear of any liens.

This article describes exactly why PayPal isn't ideal when buying or selling a vehicle privately and what can go wrong. To learn more about other common payment methods, check out our deep dives on accepting cash and cashier's checks.

Person using the PayPal appThis person is using PayPal, but not to sell their car because they read this article.

Why is PayPal risky when selling a car?

When a buyer pays with PayPal, they can choose to pay with either a bank account or a credit card. Both of these payment methods can be reversed for different reasons. If they pay with a bank account, PayPal initiates an ACH debit from the buyer's bank account. The most common way for an ACH debit to be reversed is if the account being debited has insufficient funds. In other words, the buyer doesn't actually have enough money in their account. The problem is that the payment will appear to be successful at first, but then will be reversed hours or as many as 3 days later.

If the buyer pays with a credit card, they can file a dispute with their credit card company. They can claim they never received the vehicle or that it wasn't as described and the bank will file a claim to PayPal. PayPal won't have any evidence otherwise and will most likely accept defeat, refunding the payment. Then they'll go after the seller to recover the funds.

PayPal's seller user agreement states:

When you receive a payment, you are liable to PayPal for the full amount of the payment sent to you plus any fees if the payment is later invalidated or reversed for any reason.

If you've already moved funds out of PayPal, they'll debit them back. If that doesn't work, they'll "engage in collection efforts to recover the amount due from you" which will likely impact your credit score. That means if the buyer never had the funds to begin with or they win a dispute with their credit card company, the seller would have to give the money back to PayPal.

Why doesn't PayPal offer protection for vehicle sales?

Unlike most personal property, transferring ownership of a vehicle is more complicated than just taking it home and putting it in your garage. Ownership has to be transferred on the vehicle's title and the buyer needs to be able to register the vehicle in their name. A number of issues can arise with the title and since PayPal has no visibility into this process, it's simply too risky for them to offer protection to buyers, even with a 2.9% fee.

For example, the vehicle could have an outstanding lien, be owned by someone other than or in addition to the person selling it, or the title might not be the most recently issued one. All of these things could prevent the buyer from registering the vehicle and obtaining a title in their name. Verifying the seller's legal ownership and ensuring that the title is transferred correctly in all 50 states is a problem that PayPal just isn't designed to solve.

KeySavvy protects both buyers and sellers

KeySavvy is a peer-to-peer payment service designed specifically for private party vehicle transactions. Using identity verification, the latest payment technology, and the capabilities of a licensed dealer, we're able to guarantee sellers get paid and buyers get a clear title. It's simple and fast, too – most transactions complete within a day.

Learn more about how KeySavvy works.


PayPal is convenient to use for relatively inexpensive vehicles, but it doesn't guarantee the buyer will get a clear title or the seller will get paid. This is the case whether or not you pay the 2.9% fee for PayPal Protection since vehicles are explicitly excluded in their policy. It's simply not designed with vehicle sales in mind. If you're looking for a mutually trusted payment method with low fees that is also convenient to use, consider KeySavvy. It's also possible to safely accept cash or a cashier's check if you're able to meet at the bank, but these methods don't offer title protection for your buyer.

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About Andrew Crowell

Andrew is an avid car enthusiast, software engineer, and business leader in the automotive and e-commerce industry. He's owned a couple Mazda Miatas, an E46 M3, a Subaru WRX STI, and a Porsche 911 Turbo.

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