VSA

Consumer

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

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

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.

Click here for the pdf