What you Should Know Before Making a Car Deposit 2021 Update.
What you Should Know Before Making a Car Deposit: A car security deposit is a sum of money held in trust. That is, either as an initial part-payment in purchasing a car. Below are all the essentials you need to know before making a car deposit.
It is often used to prevent the seller from selling the car to someone else during an agreed period. While the buyer verifies the suitability of the car or arranges finance.
There may be other situations when a dealer asks for a deposit. Such as when a dealer does a trade with another dealership or when a car is specially ordered from the factory.
Below are some basic points highlighted in this article which you should know, before making acar deposit;
Types of Deposits for Cars
Being Aware to Avoid Major Loss
What to Do When You Leave a Deposit
How to Get Help
Types of Car Deposits
It’s always good to first know the types of deposit; there are majorly two types of deposits that you can be asked for when buying a car, holding, or purchasing.
A holding deposit prevents the dealer from selling the car to another buyer. It is the most common type of deposit for a used car.
It may go toward the purchase price, but this needs to be decided between you and the seller.
You’ll usually have a limited amount of time to come back and buy the car.
The deposit can be either refundable or non-refundable; If you’re not 100% sure that you want the car, get it in writing that you’re leaving a refundable deposit.
A purchase deposit is most often used when the dealer doesn’t have the car you want in stock.
For new cars, a deposit is often required when buying a car from the factory. Used car dealers will sometimes require a purchase deposit when they’re trading or buying a car from another dealer.
It’s usually non-refundable, but you should confirm this with the seller.
Both you and the dealer should sign a contract that outlines all terms and conditions relating to the sale.
Being Aware to Avoid Major Loss
The first thing to remember is that if you leave a security deposit with someone selling a car; whether it is at a car dealership or with an individual selling a car you are risking losing that money.
It might actually be that; it has been in a number of accidents, or be written off due to some type of damage.
The person who took your deposit will still have your money, and you’ll be stuck either going through with the deal for a bad car or walking away without your deposit.
Another possibility is that the car is actually stolen and you’ve put down a security deposit on someone else’s car. This is why you should be cautious when asked to put down a depositto hold a car.
Unless you know the car’s history and that you will actually be able to possess the car.
If you do decide to put down a security deposit, negotiate it down to as low as possible. That way, if you are burned, it won’t be as big of a loss.
Avoiding Car Deposit Schemes
There are ways that you can avoid schemes. First, ask for the vehicle’s VINnumber, and run it through an online car history report website before putting down a security deposit.
With the number of websites offering vehicle histories, this is a relatively simple step that can save you a major headache.
Second, ask for a contract regarding the security deposit. This document should clearly explain the terms of the deposit, including the fact that it is fully refundable.
If a dealership hands you a long document filled with big words, take your time and read through it carefully.
Ask to strike out certain words, phrases, or provisions that do not favor you, like anything stating that the deposit amount is not refundable. Make sure that the dealer initials any changes that you make to the contract.
Third, after negotiating the security deposit amount down to as low as possible, ask to pay for the deposit with a credit card.
If you pay cash, write a check, or give the seller a money order, your money is gone if it turns out to be a scam. But if things go sideways and you used a credit card, you always have the option to dispute the charge.
What to do When you Leave a Deposit
If you decide to leave a deposit to hold your vehicle, there are a few ways you can protect yourself:
Agree on the terms of the deposit. Check whether the deposit is refundable, whether the deposit is part of the purchase price and how the deposit should be paid. Have all the terms written down and signed by both parties.
Don’t use cash. Cash isn’t traceable, and some less-reputable dealers will use that to refuse to give you the deposit back. Using a credit card allows you to dispute the charge with your credit card company if the dealer doesn’t want to refund the deposit.
Get a receipt. It’s important to get a receipt for the deposit for your own records, especially if there is any disagreement down the line.
Inspect the car thoroughly. Even if you’ve agreed that the deposit is refundable, checking the car before putting down your deposit can save yourself hassle down the track. Make note of the vehicle identification number (VIN) and, if possible, have the car inspected by a third-party mechanic.
Get a VIN check. Run the vehicle’s VIN to find out if it’s been in an accident, was stolen or still has a lien from the previous owner. You shouldn’t put a deposit on any car without a VIN.
Don’t leave too large a deposit. Don’t leave any amount of money you wouldn’t be OK not getting back — especially if you don’t have it in writing that the deposit it refundable if you decide not to buy the car.
Check your state’s laws. Some states set laws pertaining to car deposits that may allow you to get your deposit back if you change your mind. Look up your state’s car deposit laws before leaving one with a dealer.
How to Get Help
If you believe that a person tried to scam you or that you were a victim of a scam related to the purchase of a car, there are places that you can turn to for help.
If an individual scammed you, he or she may have committed a crime, depending on the circumstances and your state’s law.
You may consider filing a police report, particularly if you suspect that the car was stolen.