How to pay when buying a car overseas

Thinking about importing a car from overseas? Whether you’ve found your dream ride — a classic Corvette from the US — or scored a deal on an electric car from China, understanding international money transfers can save you paying unwanted extra costs.

Don't let exchange rates and fees eat into your budget. In this guide, we'll break down everything you need to know about sending money for a car purchase abroad, so you can get behind the wheel without the extra stress.

When it comes to transferring large sums of money for a big purchase like a car, the best option may be a dedicated foreign exchange service. While banks, PayPal, and Western Union are still popular choices, they can come with higher fees and less competitive exchange rates. Below, we’ll compare your options for sending money abroad to buy a car.

The international money transfer market has grown significantly in recent years, so it’s important to shop around for the best deal when sending money overseas. Here’s a list of factors you might consider when comparing foreign exchange providers for your car purchase:

Exchange rate. This is the most important factor when sending money abroad. A small difference in exchange rates can save you thousands of dollars. Be sure to compare exchange rates across different providers to get the best deal.

Transfer limits. Some providers impose minimum and maximum transfer amounts. While $1,000 is a common minimum, this shouldn’t be an issue when buying a car unless you're scoring an unusually low-cost deal.

Transfer speed. While you can often initiate transfers immediately, the recipient may not have access to the funds straight away. Typically, transfers can take 3-5 business days, so plan accordingly.

Fees. Different providers have different fee structures, and fees can vary depending on the transfer method and amount. Take the time to compare and choose the provider that offers the best value.

Transfer options. Some providers offer online transfers, others let you call in, and some allow in-person transactions. Choose the method that’s most convenient for you. Each option may come with different fees or exchange rates.

Before committing to a car purchase abroad, it's important to understand the full costs involved. Here's a checklist of what you need to know:

Shipping and customs costs. Shipping a car internationally can be expensive, often upwards of $10,000, depending on the size and destination. You’ll also need to pay a 5% customs duty on the car’s value and 10% Goods and Services Tax (GST) will be applied to the total cost, including shipping fees.

Luxury Car Tax (LCT). If the car you’re importing exceeds the LCT threshold — currently $80,567 for most vehicles or $91,387 for fuel-efficient cars — you’ll pay 33% tax on the amount above that threshold. Make sure to check whether your car qualifies for LCT before finalising the deal.

Import approval. Your car must meet Australian standards, which may involve modifying the vehicle to make it roadworthy e.g. converting it to right-hand drive or meeting emissions standards. These necessary changes could cost several thousand dollars.

Biosecurity. Imported vehicles are also subject to quarantine inspection upon arrival, and you may have to pay additional fees for the inspection and any necessary cleaning. If you're unable to pick up the car immediately, storage fees may also apply.

Registration and insurance. Importing a car may lead to higher registration and insurance costs, especially if it’s a rare or complex model. Prices can vary by state, so check with your local motor registry and be sure to compare car insurance providers to get the best cover.

Warranty issues. Imported cars might not come with an Australian warranty, meaning any repairs or parts replacement will be at your own cost.

Delivery charges. The car is either delivered directly to the buyer's location or collected from a designated depot. These services may be in addition to the shipping costs and can include door-to-door delivery, insurance coverage, and assistance with registration.

Reputable seller. Make sure you buy from a trustworthy source. Unfortunately, scams are common when buying cars overseas, so research the seller carefully and do your due diligence before sending a deposit or full payment.

Once you’ve checked the legitimacy of the offer, agreed on a price, signed the necessary documentation and confirmed all of the details with the seller, it’s time to send the payment.

Have these details ready:

• Your personal details (name, address, date of birth, phone number)
• Identification documents (e.g., driver’s licence, passport)
• Bank details (both yours and the recipient’s)
• The recipient’s SWIFT/BIC code (this unique code identifies banks globally)

The process may vary slightly between providers, but the general steps are as follows:

1. Create an account. Sign up with your chosen provider.
2. Verify your identity. You’ll likely need to provide proof of identity (e.g., driver's licence, passport).
3. Input transfer details. Add your bank details, as well as the recipient’s bank info.
4. Enter payment amount and currency. Double-check the amount in AUD and the currency of the recipient’s country.
5. Complete the transfer. Review everything, then submit the transfer and make the payment.

Buying a car from overseas can be a great way to secure a rare or unique vehicle, but it’s important to avoid common mistakes that could cost you. Here’s what you need to watch out for:

Ignoring import requirements

Every car imported into Australia must meet local safety and emissions standards. If it doesn’t, you could face expensive modifications or even be unable to register it. Always check the Australian Government’s import regulations before making a purchase.

Not inspecting the car

Buying a car without seeing it in person can lead to unexpected issues, such as hidden damage or mechanical problems. Always ask for detailed photos, a full service history, and, if possible, arrange for an independent inspection before finalising the deal.

Underestimating the total cost

While the purchase price might seem attractive, the true cost of importing a car can be much higher when you factor in shipping fees, taxes, modifications, and registration. Always calculate the full cost, including shipping, GST, LCT, and compliance modifications.

Trusting unreliable sellers

Scams and dodgy sellers are common when buying cars overseas. To avoid falling victim to fraud, make sure to buy from a reputable source and verify the car’s details. Using an escrow service can also offer additional security during the transaction.

Not planning for delays

International shipments can be delayed due to customs issues or transport hold-ups. Don’t expect your car to arrive right away. Allow extra time for the shipping process, customs clearance, and potential delays at the port.

Thinking of buying a car overseas? Check out the winners of the 2024 Mozo Expert Choice Awards to compare some of the best international money transfer options.