What To Know About Buying a Car With Bitcoin
Is buying a car with bitcoin possible? If you're in the market for a new or used car, the answer may surprise you.
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If you were an early investor in bitcoin and held on to that bitcoin, you've likely built up a substantial sum of value within the cryptocurrency. While it cost 10,000 bitcoins to buy two pizzas in 2010, a single bitcoin is worth over $35,000 in May 2022. If you're in the market for a new or used car, you might be wondering if buying a car with bitcoin is a possibility. The answer will depend on where you buy your vehicle, but you may be surprised to find out your bitcoins could land you the car of your dreams.
You Can Actually Buy Cars With Bitcoin
Several car dealerships across the country accept bitcoin as payment for a car purchase, but they're in the minority. These tend to be luxury car dealerships, although some more standard dealerships also accept this form of payment.
How Buying a Car With Bitcoin Works
In a typical car purchase at a dealership, you make a down payment in cash and finance the rest of the vehicle purchase with a car loan. You come prepared with an auto loan, or work with the dealership to secure financing.
Purchasing a car with cryptocurrency at a dealership that supports this option is similar. Instead of writing a check or paying in cash, you transfer an agreed-upon amount of bitcoin from your cryptocurrency wallet to the dealership's wallet using the methods and procedures the dealership has set up. You'll have to speak with the dealership to get specific instructions. You must follow these instructions exactly as given — if the bitcoin accidentally gets transferred to an incorrect wallet address, you can't get it back.
Sadly, the majority of dealerships at the time of this article won't accept bitcoin as payment. You can still buy a car using the value of your bitcoin, though. Sell your bitcoin for United States dollars (USD) and transfer the funds into a bank account. Then, use the money from the sale to purchase a car.
You may find an individual willing to sell you their used car in exchange for bitcoin. This is riskier, as it relies on the honesty of the other individual in completing the transaction. They could claim they never received the cryptocurrency, leaving you no recourse. For this reason, it might be better to sell your bitcoins first and complete the purchase in cash.
How To Find Out if Cryptocurrency Is Accepted
You can easily find out if a car dealership accepts bitcoin or other cryptocurrencies as payment for buying a car. The fastest method requires you to call dealerships in your area to ask. Salespeople may have to ask management, but you should get an answer quickly.
You can also check car dealership websites to see if they mention accepting bitcoin as payment. Even so, car dealership websites focus on selling cars rather than providing information on payments, so this may feel like a frustrating process unless the dealership highlights this option.
Other Considerations for Buying Vehicles With Bitcoin
Before you decide to buy a car with bitcoin, you should be aware of a few significant issues with the process. First, it's a volatile asset, which means the price can change quickly.
When you agree to a car purchase price in bitcoin, you'll need to transfer the cryptocurrency quickly to avoid any issues with the price of the value changing during the transaction. This volatility could also cause buyer's remorse. If the price of bitcoin spikes after you purchase a car, the dealership will benefit from the higher price of the cryptocurrency while you have a vehicle that decreases in value as it ages.
You may decide to move forward with purchasing a vehicle using your bitcoin directly or after converting it to cash. Either way, you end up with a taxable transaction for your bitcoin. That means you'll have to pay taxes on any gain above the amount you initially paid for the currency used in the purchase. This can add unexpected extra costs to your vehicle purchase when filing your tax return, so make sure to set money aside to pay for the taxes you'll owe.
You may have the option to either purchase a car with bitcoin at a limited number of dealerships, or convert your cryptocurrency to cash at dealerships that don't accept this form of payment. Either way, cryptocurrencies have actual value. You just have to decide if the benefits of buying a car with bitcoin outweigh the drawbacks of your situation.
