Cryptocurrency is rapidly gaining acceptance among traders as a mode of payment. Despite its high volatility, more Americans are trading it every day. Surveys show that more than one in ten Americans have invested in cryptocurrency. Select car dealers are also willing to accept cryptos from car buyers.
But this new mode of payment requires one to have sufficient knowledge of its usage before giving or receiving it as payment. Want to buy a car with cryptocurrency? Here are the pros and cons.
Pros of Buying a Car with Cryptocurrency
-
Confidential Transactions
Unlike many online payments that require information about the person sending money, crypto transactions do not involve a third party and are confidential. Cryptocurrency is a decentralized currency—there are no financial institutions such as banks involved.
You don’t have to worry about security issues, especially when transferring a significant amount to a car dealer. No intermediary will verify your earnings when you pay with cryptos. However, you’ll still need to follow the terms and conditions.
-
Low Transaction Fee
Banks and other online money transfer companies require you to pay the standard transaction fee whenever you’re sending money. Usually, the higher the amount transacted, the higher the transaction fee. Since buying a car involves transferring a lot of money to a car dealer, you may need to pay a high transaction fee if you use regular money.
Cryptocurrency has a low transaction fee or none at all. There are no overdraft charges or account maintenance fees. For instance, Binance—a reputable crypto company–charges a paltry 0.05% to 0.10% trading fee, depending on the trade volume. You get a transaction discount any time you buy or sell if you have a few Binance coins in your account.
Cons of Buying a Car with Cryptocurrency
-
Highly Volatile
High volatility is the primary reason many people are still uncomfortable about investing in cryptocurrency. The unpredictable market conditions like supply and demand majorly determine the crypto value. At one point, Bitcoin’s value dropped by about 30% in a single day. These sudden changes can hugely affect car buyers using crypto as their primary currency.
Loan Center, a company that issues title loans, says it’s almost impossible for car buyers using crypto to pre qualify auto loan as most auto retailers are fearful of the rapidly changing crypto values. So if you intend to buy a car using crypto, know the latest news and trends. Check the current market value of the crypto against the car price before making a purchase.
-
Prone to Cyber Attacks
Cryptocurrency is highly susceptible to cyber-attacks. Since digital money transfer depends on the developing blockchain technology, hackers can easily hack the system and defraud unsuspecting cryptocurrency owners.
There’s also an increase in fake cryptocurrency investment schemes used to scam crypto users. Therefore, unless you have a solid understanding of all the risks involved in crypto trading, avoid buying a car using digital currency. If you’re a seasoned crypto user, go for it!