Hi I am looking for advice I am selling my car I have been asked if I would take a bankers draft, issued by a bank, as payment, does anyone know if there are any pitfalls to bankers drafs appart from say a forged one, how long do they take to clear and can they be cancelled etc, many thanks

 

The pros

They can't be cancelled


The pitfalls

Forgery's ARE out there, clearance is the same as a normal cheque

 

At the very least, you need to ring the issuing bank to confirm that a draft has been issued from the account in question.

 

if you ring the bank, they will confirm all the details

 

on some there is a code number, therefore the bank will check if it is ok. Try to stick with mainstream/highstreet banks.

 

Get them to do an electronic funds transfer directly into your account. Funds clear in 24 hours - you can phone the bank to make sure that the payment is in your account and it costs no more than issuing a bankers draft.

 

Be very, very careful with bankers drafts: I've heard of scams where the draft appears to clear, the goods are handed over, then two weeks later the bank says the drafts a forgery and you've lost the money and the goods. Anyone here in the banking business who knows how drafts work?

This scam warning probably isn't directly relevant but has some useful info such as the warning "The money may look like it has cleared initially but can go on to bounce days later":

http://www.autotrader.co.uk/BIKES/sell/fr-1.jsp

 

UK drafts are cleared by the four working day (max.). There can be no claims of non payments with these. Frauds can happen when foreign banks are used and it can take weeks to confirm payment.

As suggested best to electronic payment of funds direct to your bank account. Better than cash/cheque IMO.

 

call the issuing branch to confirm its genuine. Get the telephone number for the branch yourself from directory enquiries, dont use the buyer to provide you the telephone number.

 

I have used the electronic transfer on two occasions. The banks do charge but I don't thinks it costs any more than Bankers Draft (circa £25). If you and the person you are exchanging the money are with the same bank there is no charge at all.

 

Do the 'deal' during a working day or sat am. Check what bank buyer is with. After deal is agreed then both go to the bank and let him have the draft made up there and then. You'll know it's genuine that way. This is how I bought my Westie as it was a 500 mile round trip so I didn't want to make 2 journeys and obviously didn't want to have the draft made up and then not buy the car! Seller was happy with this as he sees the draft made up in the bank itself (if that doesn't convince a seller, then nothing will!!!)

 

Banks will NOT always confirm authenticity over the phone. The only 100% way is to take it to the bank.

 

I used to work in a bank and I'm thinking of it when I sell my motor. Basically they're drawn on a bank as opposed to a person, so providing it's legit you'll have a lot more security. Obviously if it's fake then it's only as good as fake money - ie not a lot.

Although it still officially takes 4 days to clear in effect, instead of it going through the clearing system your bank will phone the issuing bank and check that the funds are ok so you'll have the ok from your bank in 1 day (providing you pay it in straight away). The money will still show as uncleared at a cash machine and on the banks machines, but usually once your banks ok'd it they'll let you draw against it.

It's a few years since I worked in a bank but that's how it used to work. Someone else suggested getting them to send it electronically - that's a pretty secure way although normally it'll take 3/4 days to hit your account.