Deposits

Can I get a deposit refund for a car bought at a distance (i.e. online or over the phone)?

For sales at a distance (i.e. when a car is sold over the phone or internet without the customer ever visiting a business’ premises), then the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 say that you have the right to a 14-day cooling off period and to have your deposit back during this time if you decide to cancel for any reason – you are not obliged to give a reason when asking for a refund in this scenario.

For more information about distance sales, click here.

What happens if I have put down a deposit, but the business pulls out of the sale?

There are some exceptions where you may be entitled to get your deposit back, such as if the vehicle manufacturer is unable to supply the car due to production issues or if your chosen specification cannot be provided. Similarly, if the seller needs to cancel the order if a car is no longer available, a deposit refund is also due.

If the business has incurred no costs reselling the vehicle, can I get my deposit back?

The general rule is that deposits are not refundable unless the terms differ, this does not prevent the business from using an element of common sense. For example, if no additional costs are incurred due to you withdrawing from the purchase, or where the expense associated with this withdrawal is less than the deposited funds, this can be taken into account when deciding as to whether to award a proportion or the full deposit amount back to you.

In the event that you are unable to have your entire deposit refunded, it is important that the business is able to demonstrate that you were made aware of this condition when buying the car.

This is reinforced by clause 4.5 of The Motor Ombudsman’s Motor Industry Code of Practice for Vehicle Sales, which is approved by the Chartered Trading Standards Institute (CTSI), and states: “Where a deposit is required, the terms and conditions of the deposit will be made available to you [the customer]”. In an earlier clause (4.3), the Code equally refers to the fact that any contractual terms must be made clear to consumers during the vehicle purchase process.

What happens if I have put a deposit down to buy a car, and I’m then rejected for finance to make the purchase?

If you have paid a deposit prior to any credit assessments for financial products, and it is found that you do not qualify for any financing to help purchase the vehicle, this may not invalidate your contract to purchase the vehicle, meaning the deposit will often be lost unless the terms and conditions state otherwise.

What happens to my deposit if I buy a car on a finance agreement?

When you buy a vehicle on finance, you are usually agreeing to two contracts depending on the type of agreement you have. The most common agreements include your contract to buy the vehicle, whilst the other relates to the financial agreement to provide you with the funds to make the purchase.

Also remember that whilst a finance agreement has a 14 day cooling off period, this may not cancel the entire deal as you have essentially signed two agreements – one with the seller and one with the finance company – so make sure you check this before cancelling any finance on your vehicle.

When can I get a deposit refund?

If you have put down a deposit, this implies you have a contract with the seller, so it is unlikely that you will be able to get it back, as there is no automatic right to a refund of a deposit.

If the terms of the contract or the terms of the deposit say that it is refundable, then this would usually be the case, so it is always worth checking the small print before you agree to the purchase or make any form of payment.

If you have simply changed your mind, or even if there is nothing wrong with the car being purchased, this is not a sufficient reason to have your deposit returned.

You will not have the automatic right to have your money back if you request this, and in the majority of cases, a deposit will be non-refundable. This is because the vehicle would have been withdrawn from sale, and in some cases, may have been registered your name (i.e. for a new car), thereby preventing anyone else from buying it.

When should I put down a deposit?

You should be sure that you’re completely happy with your decision before putting down the deposit as it may not be possible to get a refund. Your deposit should always be paid once you have agreed or signed the contract of sale, as these set out the terms of the contract, as well as key elements, such as your offer to buy the vehicle, and the agreed price.

What is a reservation fee?

A reservation fee differs from a deposit in that it is a payment that merely secures the vehicle for viewing (to prevent it going to another customer), but does not form a legal contract of sale between you and the seller.

What is a deposit?

When buying a brand new or second hand car, and as part of the process of forming a contract between you and the seller, it is commonplace for a business to ask for an initial payment equivalent to a percentage of the overall sale price. This signals to the retailer that you have an intention to purchase the vehicle, whilst also giving the business a means to recover any costs in the event that you choose not to proceed with the purchase. Once the deposit has been paid, this amount is often deducted from the final sum due.

It is also worth noting that a deposit differs to a reservation fee.