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Deposits

Everything you need to know about deposits and the importance of written deposit agreements
What’s it for?
In law, a deposit usually shows a dealer that you intend to go ahead with a purchase. If that is not the case, do not leave a deposit on a vehicle.

If you complete the purchase, the deposit must be applied to the purchase price of the vehicle. The deposit becomes a down payment or partial payment.

However, in some cases, a deposit may be a fee for services, such as to:

Hold the vehicle for some time
Bring the vehicle in from another dealer
Bring the vehicle directly from a manufacturer
Arrange financing for the vehicle

If you intend to leave money as a partial payment, make sure you get in writing that the money you are leaving is a partial payment.

Protect yourself: Get a deposit agreement in writing

Before leaving a deposit, ask the dealer to provide a written deposit agreement. This is a best practice at many dealerships, but is not required. The agreement should include this information:

What the deposit is being taken for
The amount of the deposit
Whether the deposit is refundable or non-refundable, and under what terms
- If the dealer can’t provide the vehicle (or any other promised services), the deposit amount should generally be refunded
Any other terms of the deposit, such as:
- Is the deposit amount applied to the purchase price of the vehicle?
- When will the vehicle be delivered or available?

Make sure you understand all the terms in the deposit agreement. Don’t forget to take a copy with you before you leave.

Warning: Common law rules will apply if you have no written deposit agreement

Your deposit will be seen as your commitment to complete the transaction
If you do not complete the transaction, the seller can keep 100% of the deposit, even though they have suffered no damages
If you do complete the transaction, the deposit must apply towards the purchase
If the dealer does not complete the sale, you are entitled to a refund of the deposit

Helpful links to information about deposits

Sample deposit agreement
Section 10 of the Vehicle Sales Authority General Guidelines
Answers to common consumer questions about deposits available at the website of the Office of Consumer Affairs

If you have any questions, please contact VSA Consumer Services.

NOTE: This is to provide general information and is not intended to be legal advice.

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