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You can finance your car with Bitcoin, but is it a good idea?

If anyone were told fifteen years ago that they could purchase vehicles, houses, and insurance in virtual currencies uncontrolled by any bank, they’d likely think the narrator has a rich imagination. Any other payment method outside the traditional financial system would seem too futuristic to be taken into consideration. Yet, these days, buying a car with Bitcoin is achievable if you think the price is good, are able to find a car dealership that takes cryptocurrency as a payment form, and the practice is legal in your country.

Car purchasers opt to use their Bitcoin throughout the process for many reasons. For some, the near-anonymous aspect of the transaction lures them into converting cash to Bitcoin to conduct the payment or let their digital tokens fly from their wallet. Others may be attracted by how convenient and fast the transaction done this way are. Last but not least, finding a better deal on the vehicle is also possible since the company cuts on the transaction-associated costs that would otherwise make a significant cut in their ROI. Thus, a future-oriented business may engage in a friendlier negotiation process.

Several considerations must be stuck in your mind when pondering whether Bitcoin is the right route to finance your car, so let’s check them out and discover if this method suits you.

panning photography of gray coupe on road

Photo source: https://unsplash.com/photos/iRnUeA04kUY

How does the Bitcoin purchasing process go?

A typical vehicle payment at a regular dealership usually involves splitting the payment: you may finance your purchase with cash initially and then use an auto loan until it is completely paid. You may have a car loan secured already or figure out financing with the dealership. If you deem buying a car with Bitcoin a complicated endeavor, you should know that the process unfolds similarly to a traditional, typical car purchase. Instead of opting for a card, cash, or check, you will have to transfer the amount of Bitcoin you have agreed upon from your digital wallet to the receiver’s address through the set-up methods of the establishment. In this regard, it’s important to note that you must pay attention to where you’re transferring your funds, as cryptocurrency payments are not returnable if you make any errors. If your coins arrive at the wrong destination, you won’t be able to get them back.

Indeed, many car owners may be willing to give you their car for a fair amount of cryptocurrency, as this is a valuable asset they may profit from later. If you’re considering resorting to this method, you need to ensure the seller is trustworthy and has your interest at heart, as conducting business with someone you don’t know much about may send you into a trap. For instance, the seller may claim they were never given any Bitcoin, leaving you no recourse. Cryptocurrency transactions are trackable, public, and securely kept in the network, and it only takes holding the receiver’s address to prove the transfer. Still, it’s better to be safer than complicating things later, sticking with the typical payment method.

What should you take into consideration when buying a car with bitcoin?

There are several essential considerations to keep in mind when deciding to buy a car with Bitcoin. If you want to fill a Bitcoin order now and wait for your assets’ price to increase, you may be able to find a car worth more than your initial investment. However, you must consider the high volatility of cryptocurrency, meaning that you may also overpay for the purchase in a bear run when prices are falling.

Also, tax implications top the list of priorities before closing a deal. Stipulations for these types of payments differ from country to country, so ensure you’re updated on the regulations and taxes in your area.

Bitcoin is well-known for its dramatic fluctuations, so you’ll be willing to take some risks. The only way to ensure the purchase is profitable is to complete the payment when Bitcoin sells at a high price. Otherwise, your acquisition may be on the opposite side.

Last but not least, comparison is the key to success. Make sure you’re thoroughly comparing the desired vehicle’s price in Bitcoin and other cryptocurrencies and figuring out if now’s the time to complete the transaction and through which means.

What’s at stake for car dealerships that take Bitcoin payments?

Not many establishments are willing to hand in the keys of a car and seal the deal in exchange for cryptocurrencies, and it’s easily understandable why. To make crypto payments possible, a merchant needs to introduce a crypto payment gateway system, which comes with added costs. Additionally, the bureaucratic part consumes time and effort, which not every merchant will spend if their business is already doing fine. Additionally, the adopter should have some basic cryptocurrency knowledge and keep up-to-date with changes in the law and financial system, ongoing developments, and other fundamental aspects. It’s not hard to see why many car dealerships resort to the traditional payment system. Though, it may make you wonder if there’s a catch with companies making crypto payments possible.

The truth is that there are perks that car establishments engaged in crypto can gain, and they may accept Bitcoin payments for different reasons. Accepting Bitcoin payments improves convenience, as transactions are conducted directly and without implication from any bank/credit card company. Car companies can lower transaction expenses since Bitcoin is uncontrolled and involves no bank transfer. Processing fees for credit card transactions can reach 4% or more, significantly reducing merchants’ revenue. For instance, from a $20.000 deal, $600 would be put aside to pay fees. With Bitcoin, payment gateway merchants may take a fee of 1%, the equivalent of $200.

What are your options?

You can find some companies willing to trade with cryptocurrency, though they will be in the minority. Usually, crypto-friendly establishments are represented by luxury car dealerships that provide oldies or premium cars, but with a little digging, you may also come across reputable dealers with a more diversified range of brands. Generally, your options include but are not limited to the following:

  • Maserati
  • Ferrari
  • Tesla
  • Mercedes
  • BMW
  • Audi
  • Lexus
  • Nisan
  • Ford.

Additionally, buying from the automaker means you have the freedom to  

Bottom line

Cryptocurrencies have gained much traction and emerged as popular payment methods in many industries, from real estate to tourism. Yet, the automotive industry is among the most popular places where people have kept putting Bitcoin and other cryptocurrencies. The low-to-zero transaction fees involved may result in financial benefits for you. Additionally, if you’ve bought Bitcoin at a bargain price, you’re likely to be able to buy a more expensive car than you normally would by using traditional currency.

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