Buying a used car on a cash advance in a new town

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It seemed like such a simple question: “How do I get a cashier’s check in a city where I don’t have a bank account?

Our daughter’s car shopping coincided with a family wedding invitation in Texas near her college. My cousin the Army Ranger got married last week to the woman of his dreams, and it was an impressive ceremony. The open-bar reception was even more impressive, although I think the police have agreed to drop all the charges. Once we had that important task out of the way (the wedding, not the misdemeanors), we spent some time “helping” our daughter buy her first car.

"Ekahi" is the Hawaiian word for "first" or "number one".

Ekahi: 1999 Honda CR-V

I bought my first car from a dealer in 1981 (a new Mazda GLC, $6000) and I still regret paying top dollar for it. (Over $15K in 2012 dollars.) I had no idea how to buy a car, let alone a used one. I basically looked around our college campus, flipped through Consumer Reports, walked onto the dealer’s lot, held out my credit card, and said “I can afford $6000. Whaddaya got?” I made up for my ignorance by driving that car into the ground over the next 12 years (and eight duty stations in nine time zones). I even sold it for $600, despite the rubber-lined hose clamp on a piece of radiator piping.

In 1993 we were ready to buy a used car. We could look up vehicles in the “classified ads” section of the local “newspaper”. (Kids, you can Google this one. You wouldn’t believe me anyway.) We could go to the library, where the librarian would watch over us as we paged through their only copies of the Consumer Reports Used Car Guide and the actual hardcopy Kelly Blue Book. We spent lots of time making phone calls and visiting cars just to see what they looked like, because you rarely got a photo in the ads. If we were selling a car, it cost $40-$50 to advertise in the “right” places.

By comparison to the last millennium, today’s used-car tools are cheap & frictionless. We’ve bought & sold half a dozen since the early ’90s and we’ve never been burned. If we’d been buying new from dealers then I think I’d still be working. A vehicle can be a significant financial decision, right up there with marriage and buying a house, and buying new can quickly deplete your assets– even before the vehicle starts depreciating. Add in the frustration & drama of the new-car buying process (although that’s improved a lot too) and I’m never setting foot in a dealership again.

When spouse & I got to Texas last week, our daughter had already been on the project for a couple of weeks. She’d read our e-mail guide to buying a used car. She’d thought about what she “needed” in a car. She’d asked her NROTC instructors about their first cars and what they’d do differently today. She’d been window shopping and talking to friends, and she’d decided that she really couldn’t afford more than $5000. (I thought she’d have to go as high as $8K.) She has the money in CDs, but she asked that we parents supply the funds with a credit card/cash advance or a transfer to her so that she could write a personal check.

She’d scoured the local Craigslist and CarMax ads for her chosen models & prices. She signed up for the Consumer Reports Used Car Guide website ($30/year, unlimited access) and CarFax (~$50, five reports). She found a local mechanic who’d do 90-minute inspections ($100). She had a list of sellers and she was ready to go.

Her very first test drive was a total bust. Her high-school Spanish wasn’t up to the task of talking cars over a cell phone, and the seller never showed– but let’s just say that the evolution had significant training value. She bounced back. By next morning she’d run through a dozen Craigslist ads, researched them all on Consumer Reports, talked to several owners, run some VINs through CarFax, and lined up four more appointments.

The next seller had a 1999 Honda Civic CR-V with 163K miles. He showed up on time, and she hopped behind the wheel for a test drive. (I was in the back seat to check out the rest of the car while she drove, but I’d agreed to keep my mouth shut.) I was surprised at how well the engine & automatic transmission had held up, and the highway driving gave her an unexpected opportunity to check the ABS brakes.

The owner displayed a charming ignorance of all things automotive. He’d only owned the car for two years and he was moving out of state. There had been at least two previous owners (including a car dealer) and he only had records for a recent radiator replacement. We crawled around the car looking under the hood and chassis. The engine had a small head gasket leak. The interior was full of dirt and kid’s toy debris. Doors & windows squeaked from lack of lubrication. However there were no other fluid leaks, the air conditioning was in great shape, the CV joint boots looked fine, and two tires were new. The body was thoroughly dinged up but that was actually an advantage for her— he hadn’t been getting many phone calls because you could see the damage in his photos. She was fine with dings & scrapes, so she dropped it off at the mechanic’s.

While the mechanic put the car on the lift, she chatted with the seller. He was in America on a student visa and had decided to return home to help his family. It turned out that his home country’s air defenses were disabled by the U.S. military last year. (I’m not naming the country in this blog due to SEO keyword & spam concerns, but it starts with the letter “L”.) Both my daughter and I were considerably nervous that he’d ask us what we did for a living.

But our occupations never came up, because he was much more interested in our money. Due to his relative lack of experience with PayPal and American banks, he didn’t trust either of them. We also got the impression that he was leaving in a few days and wouldn’t wait for personal checks to clear. He wanted cash, period. My daughter is much more charming and persuasive than me, but her social skills didn’t cut it. $4700. No checks, not even a cashier’s check. Cash. Period. Deal breaker.

We agreed to meet in another hour (after the mechanic finished), and then we went in search of a bank. It was already after 4 PM.

Last semester she’d set up her NROTC unit with an account at Chase Bank, so she started there. Because of our previous conversation with Navy Federal Credit Union, we thought that we couldn’t use their ATM card as a debit card. (In retrospect that was probably bad advice from their phone rep.) As a result of those other phone conversations, we’d decided that I’d get a cash advance on my American Express credit card.

The Chase teller, however, said the card wouldn’t process on her system. Bummer. Thanks a lot, Amex.

I pulled out my USAA MasterCard. Much to our relief, Chase’s computers were happy and the teller handed our daughter 47 Benjamins. (I was handed the cash-advance receipt.) If USAA hadn’t come through then we would have tried NFCU’s debit card in desperation, and that probably would have worked. So our misunderstanding cost us $141.

The NFCU rep and I didn’t communicate clearly. I asked what the debit card limit would be “If I walk into a bank”, and she responded “The ATM limit is $600/day”. However if I’d asked “If I show my photo ID to a bank teller”, then NFCU’s answer probably would have been at least $5000 and maybe even higher.

The best solution came from Jay’s comment in the cashier’s check post: traveler’s checks. We still don’t know why Chase wouldn’t process an American Express card, although Amex doesn’t play well with some banks and retailers. We never tried our NFCU debit card, but what if that hadn’t worked either? The only sure answer is very old-school: traveler’s checks. I didn’t want to use them because most people today no longer know how to cash them, and this seller would never have touched them. However Jay pointed out that the Chase teller would have happily accepted them and promptly handed over the cash. The 1% fee is a small price to pay for the reassurance that you’d be able to process a transaction without worrying about the compatibility of everyone’s computer systems.

The mechanic came up with about $1500 of “nice to fix” repairs: a new boot on the rack & pinion steering. Two wheel bearings that squeaked during hard high-G turns. A new timing belt (before 200K miles). The head gasket. He listed every little thing, both to help her drive the price down and in hopes that he’d get her business.

We put on our sad faces and she broke the bad news with the seller:

Her: “Because of all these repairs, I need an extra $500 off the price. I’m offering $4200.”
Him: “I can’t do that. The price is $4700.”
Her: “I’m sorry, but the car has too many problems for that price. We’re going to keep looking.”
Him: “Did you manage to find a bank that would give you cash?”
Her: (holding up thick envelope) “Right here!”
Him: “Well”…

When we handed over the $4200, he asked us to drive him over to Bank of America. He literally fed the money into the ATM before he signed over the title. I guess he was worried about theft or counterfeiting. The ATM scanner rejected one bill because it had graffiti on it, but she “happened” to have a substitute with her.

It took four hours from test drive to title signatures, but it was done. She canceled her appointments with the other sellers.

She’d called USAA with the VIN while she got the cash, so car insurance was already in place. (Including roadside assistance & towing.) USAA even set her up separately with her own policy, so she’s finally off our policy!

Next morning, Texas DMV went smoothly. We learned that they have their own bill-of-sale form, which took another quick phone call to the seller for his signature, but the title application was finished before lunch. It took almost as long to do the shopping for her car supplies.

So now we know how to get a large chunk of cash in a city where we don’t have a bank account.

I don’t think we’ll ever need to do this again. Military families usually transfer to towns where their (military-friendly) banks or credit unions already have branches. Even if the new duty station is in an isolated location, she’d have the time to establish a bank account weeks before she actually tried to buy the car. Spouse and I don’t ever plan to go out of town to buy a car ever again. Our daughter will drive this beater for a couple of years before having to decide whether to sell it to another college student or to try to fix everything up for a cross-country road trip. But when she gets to her first homeport, her credit union will already have a branch there for her.

Now that she actually has the car, she’s not planning to put a lot of miles on it. She’s only a couple of miles away from campus, and as long as the weather holds then she’ll probably keep bicycling back & forth. But she has convenient transportation for bad weather, and she can really haul her dorm-room possessions to her first apartment!

Best of all, next time she’s looking for a good used car she knows how to do it on her own.

Related articles:
The finances of used cars
Getting a cashier’s check

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WHAT I DO: I help you reach financial independence. For free. I retired in 2002 after 20 years in the Navy's submarine force. I wrote "The Military Guide to Financial Independence and Retirement" to share the stories of over 50 other financially independent servicemembers, veterans, and families. All of my writing revenue is donated to military-friendly charities.

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