The majority of car buyers finance their new car. Some obtain financing through their bank or credit union, while others get approved for financing through the dealership. While a loan is the most common way to pay for a car, this isn’t the only financial resource for buyers.
Dealerships may have stipulations related to taking cash, credit cards or a check for a new car purchase. Some dealerships also accept crypto for car purchases now. How does paying with crypto work, and is this type of payment method going to be a new norm for consumers?
There are multiple types of crypto; the most popular cryptocurrencies include:
What are Cryptocurrencies?
Cryptocurrencies or ‘crypto’ for short are purchased and sold. Crypto is valued based on dollar volume; each type of crypto might have a different value. In addition, the value can go up and down (a bit like stocks). The fluctuation in price is due to supply and demand.
Dealerships might have heard about the recent crypto crash. Essentially, while some crypto was once quite valuable, many different cryptocurrencies have fallen in value. The Street reported that crypto has lost $1.6 trillion since November.
Unlike traditional dollars and coins, crypto is held in a digital wallet. This currency can be used to pay for goods and services, although not all stores accept crypto as a form of payment. Investopedia explains that ‘cold storage’ is the safest place for crypto. This term refers to wallets that are offline.
While standard wallets are just opened by their owner, digital wallets (online or offline) require keys to retrieve their contents. This helps ensure that the crypto stays safe. Unfortunately, Investopedia notes that owners can lose their key, and, thus, they can lose their crypto, too.
Do Dealerships Accept Crypto for Car Purchases?
Some dealerships accept crypto as a form of payment. RateGenius explains that they might work with a merchant that allows them to accept crypto and then convert it into standard cash.
Crypto payments are not yet standard across car dealerships, but some dealerships accept this currency for payments. Bankrate outlines several positives and negatives related to buying a car with crypto.
For example, a consumer might have paid less for the crypto than what it’s now worth; thus, they can buy a better car for a lower overall investment. However, a drawback highlighted by Bankrate is that a transaction can only be secure when both wallet addresses are known.
In addition, there are many forms of crypto. If a dealership accepts Bitcoin and the buyer has Ethereum, the buyer can’t use their Ethereum crypto towards the purchase.
Different dealerships also could have their own stipulations related to crypto. Maybe a dealership only allows crypto for a down payment but not for the entire purchase.
Which dealerships or brands accept crypto? Audi accepts crypto payments (via CryptoExchange). In addition, some BMW dealerships accept crypto. One Toyota dealership and one Nissan dealership also accept crypto. However, Bankrate explains that the Nissan dealership only accepts Dogecoin crypto for down payments (up to $5,000).
Bankrate also reports that these dealerships also accept different forms of crypto:
- Carriage Nissan
- MotorCars of Atlanta
- Edmark Toyota
- Reed Jeep, Chrysler, Dodge and Ram
- Bob Moore Auto Group
Buyers who are interested in paying with crypto should visit the websites of dealerships to better understand payment options. They also might call to inquire if crypto is accepted. Dealerships that plan on accepting crypto might note this on their webpage and include the types of cryptocurrencies that are accepted.
Tesla and Crypto
In the past, the manufacturer has accepted Bitcoin as a valid form of payment. However, Tesla now only accepts Dogecoin. Only certain products may be eligible. Currently, one Dogecoin equals $0.087. However, one Bitcoin is worth more than $30,000.
The Rise of Crypto for Car Purchases
Auto News published a story about how more dealerships are beginning to accept this form of payment. One dealership mentioned in the article used BitPay to convert crypto payments into standard cash. The dealership noted that it didn’t hold crypto because of the currency’s volatility.
The article discussed how accepting crypto allowed an overseas buyer to make their purchase; the other payment option for the buyer was related to wiring a payment. However, the dealership noted that it wasn’t willing to hold the vehicle for the time it would take for a wire payment to clear, per Auto News.
The crypto payment allowed the buyer to purchase their vehicle and the dealership was able to receive a payment that was able to clear (or be converted) quicker than a wire transfer.
Is Crypto the Future for Dealerships?
While several car dealerships accept crypto as a form of payment—or even just for a down payment—these businesses might be in the minority. There seems to be an increased interest and acceptance in these payments, but perhaps not all dealerships will be comfortable with this digital currency.
One dealership noted to Auto News that the volatility of crypto was a barrier in keeping the currency; instead, the accepted crypto payment was converted to cash. It’s impossible to know how the majority of dealerships will proceed when faced with the decision about whether or not to accept cryptocurrency.
Some dealerships could adopt crypto as a form of payment but convert it to cash (instead of holding it). Others could decide that accepting crypto isn’t for them. In addition, more forms of crypto may begin to emerge.
There are already many different types of crypto, and more could possibly emerge in the future. Dealerships might become familiar with the different currencies.
Payment Methodologies Among Dealerships
Dealerships might have their own stipulations related to payment options that are accepted. Since the majority of buyers use a loan to pay for their purchase, financing from banks likely makes up the majority of payments.
Cash payments also might be perfectly fine for many dealerships, although there could be guidelines when accepting cash. Some dealerships accept credit or debit cards, others don’t.
In addition, the acceptance of cashier’s checks and even personal checks varies per dealership. Some wouldn’t consider a personal check.
Like other forms of payment, dealerships might simply have a personal preference as to whether or not they want to accept any type of crypto. For dealerships who consider the crypto payment, they might want to research the currency that is offered and to find out what crypto they want to accept.
Remember that the different types of crypto aren’t interchangeable; Bitcoin isn’t the same as Dogecoin. Each crypto has its own value.
Before delving into the world of crypto, dealerships might simply need more advice or additional information. Ultimately, both the dealership and the customer need to be comfortable with the forms of payment that are acceptable.
If the customer only wants to pay in crypto, but the dealership doesn’t wish to accept this newer form of currency, perhaps a different dealership would be the better option for their purchase. In some cases, the dealership and the customer simply won’t mesh.
Are cryptocurrency payments right for your dealership? While this form of currency is on the rise, every dealership has to make the decision on whether or not receiving crypto as a form of payment works for their business. Again, dealerships can research the different types of crypto and reach out to their financial team to best determine if they want to get on board the crypto ride.