Tip of the Day: How To Get Your Deposit Back Without Drama
I recently received an email from someone who had put a deposit down on a vehicle and had decided to back out, and they were having problems getting the dealership to refund the deposit. They had paid the deposit with a check, and while the check had not been cashed, getting it back was proving difficult, with the dealership threatening to keep the deposit if they didn't go through with the deal. Most dealerships are more respectable than this, but there are still those bad apples out there. While consumer protection laws vary from state to state, the vast majority prevent a dealership from keeping a deposit in the event the consumer does not purchase a vehicle. Learn how to protect yourself from those dealerships that still think they are doing business in the 20th century, after the jump.
So if you change your mind after putting a deposit down, how can you be sure that the dealership will do the right thing and promptly return that deposit? The best way to assure that happens is to put your deposit on a credit card. By doing this, you can easily file a complaint with the credit card company in the event that the dealership decides to try to keep your deposit. Often, just threatening to file a complaint with the credit card company will result in the dealership doing a quick 180 in their decision. You also give yourself a "free" 30 day loan. If you do have to file a dispute, the credit card company will not require you to pay the charge until the credit card company conducts its investigation and the dispute is resolved.
Now, are there ever cases where the dealer can hold your deposit? Again, while consumer protection laws vary from state to state, there are some general cases where a dealership may have cause to keep some or all of your deposit in the event you change your mind. These generally involve the dealership incurring some sort of expense involving the vehicle, prior to your taking delivery. These include transporting a vehicle from another dealership or adding dealer installed equipment like a sunroof, paint protection or anti-theft devices.
Consumers also often wonder what an appropriate amount is when you do leave a deposit. I often advise to first offer $100 (again, on a credit card). If the dealership balks, ask them what they would like. Most will "ask" for $1000. Counter with an amount of no more than $500. If the dealership refuses, then you need to ask yourself "why" and perhaps think about using another dealer.
It is important to again note that most dealerships are not out to cheat the customer or "steal" their deposit. The act of taking a deposit is designed to take you out of the market and shopping other dealers and to know that the dealership is not wasting its time (which is also its money). So only leave a deposit when you are certain you have picked your vehicle and dealership. But put it on a credit card, just in case your situation changes beyond your control.
- Posted by
- Lee Scott April 27, 2009, 2:00 PM
- Permalink
- Categories:
- Car Buying, Tip of the Day
- Technorati Tags:
- Buying Cars, Credit Cards, Deposit
I've only gone the credit card route as Lee suggests. I've also never known of anyone to have their deposit kept when they back out of a deal.
However, if this were to happen, I would have zero tolerance. I'd quickly inform the dealer that I'm be heading straight to the county courthouse to file a small claims suit. I'd also remind them that punitive damages are up to 3 times the disputed amount, not to mention the damage to their reputation. Even a disreputable dealer would refund your deposit at that point.
Again, I've never known of anyone to have an issue. I wonder if the person who sent you the email is telling the whole story.
Several years ago I left a cash deposit of $300 to hold a car at a major Chevy dealer; got a receipt. I stopped at another dealer on the way home and found a better deal on a car more exactly like what I wanted, so bought it on the spot. Returned to the Chevy dealer 24 hrs later for my deposit. The salesman would not refund my money, said the deal is already listed on their sales chart as done. I spoke with the sales manager who said the $300 is liquidated damages because they would have sold that car by now except for the hold. I threatened to sue, he said they would countersue me. I contacted an attorney who said it wouldn't be worth the fight, consider it a $300 lesson, other people have paid considerably more for that lesson. I wrote a letter to the owner of the Chevy dealer and enclosed a photocopy of the receipt, never heard back. Never forgot it and since then whenever I buy a car I have been determined to get another $300 under their best deal, every time.
Wait wait wait, what would be the point of collecting a deposit if it is refundable?
There would be no point.
Deposits by default should be nonrefundable. That's why it's a deposit.
How on Earth does it make sense to collect a refundable deposit? It makes none.
Explain any reason why one would want to collect a refundable deposit. The only reason to collect a deposit is if it's nonrefundable.
Otherwise the seller would collect the entire sum on sale. There would be no point to having a deposit. Therefore deposit by concept must be nonrefundable.
stop calling it a deposit.
and call it as it is meant to be... a DOWNPAYMENT on the car. Dealerships use manuipulative words to get the customer to put money down as soon as possible.. even blatantly telling a customer it's refundable and then turning around and saying its not when they back out of the deal.
It's a DOWNPAYMENT on the car to be applied towards the purchase price of the car.
Most "deposits" are made before the salesman and customer even agrees on a price. So I ask you "NonRefunders" out there... in the specific situation of Carbuying, how does it makes sense for a "deposit" to be nonrefundable to "secure" a car BEFORE both parties have even agreed on the purchase price of the car?? Why then would a salesman ever sell the car?? Rather just constantly take deposits and then offer to sell the car at 6000$ markup, know the customer would refuse, and keep the deposit. Wash Rinse Repeat all day and you'd make more money wihtout even actually having to sell a car.
and COME ON!! how many times had a dealership SOLD the car, AFTER the deposits have been made, AFTER the Buyer's Order Signed, and even AFTER the car's been already paid for waiting for pickup. If you havent heard of these dealer tricks, you're ill informed and ignorant, a few simple search articles would draw up plenty stories.. and if you think these are wild claims and isolated incidents, beleive my story if you choose, a friend of mine that works at a Toyota Dealership recently put down a deposit on a car at a diff mftr dealer, and came a wk later for pickup and they told him they sold the car. BooHoo.
Fact of the matter is , a Car dealer would GLADLY sell your "reserved" car in a heartbeat if someone else is willing to pay MORE for it. Yet, customers arent allowed to retract their interest if there's a dealer willing to sell LESS for the car?? Idiots.
However, i DO agree, that Once you walk out of the F&I office w. the intent to buy, THEN your deposit should be considered nonrefundable (Unless the car is NOT as described). Until then, anything goes in the F&I office so you shouldnt be bound to purchase the car after your initial downpayment with the Salesman when the Finance guy can still have a chance to screw you over on the car price.
*Downpayments are usually left BEFORE an agreed price (which is a big NO-NO, should always refuse until you have a signed Buyer's Order to legally bind them to an agreed price)
*You have not bought the car until you DRIVE IT OFF THE LOT (So I've heard been emphasized. Do your research and find out)
*A "Deposit" at a dealership is USUALLY said to be refundable by the Salesman. They might turn tricks on you later on so best to record conversations or get it in writing..