Checks and Drafts.
By Christopher Morabito, J.D. | August 3, 2008
Checks and Drafts
Once you have handed in your papers, your next and final step is waiting for the checks or drafts. Generally, the auction has a “window,” where you pick up checks. There are auctions that give you your check at the same window where you handed in your papers while others have their own system. Once again, always find out these incidentals when attending a new auction.
Most people know what a check is, however, many people do not know what a draft is (in this case it is not a beer) and drafts are prevalent and a way of payment at car auctions.
Drafts are issued every time a dealer sells a car “title attached.” The drafts look exactly like a check, however, are usually different in color and say “draft.” The reason why a draft is used, is that a draft is a “negotiable” instrument that only becomes “payable” or “negotiable” or “cashable” when the seller hands the title into the auction. Therefore, if you sell a car at a Wednesday sale and you sell it
title attached, you will be issued a draft and that draft will not be worth the paper it is written on until the title to that particular vehicle is submitted to the auction.
An important word of caution about drafts. If you deposit a draft before you submit the title, it will bounce. Both the auction and the bank will become very upset if you deposit drafts and it will only further delay the time in which you can use that cash because you will have to wait for the bank to mail you back the draft (which could take a week to ten days) and only then can you redeposit it, and only if you have submitted the title by that time.
REMEMBER: Sell title attached = Draft = no good until submit title, so don’t deposit until then.
Topics: sell at auctions |
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