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I saw a second hand car for £5995 on Saturday. Discussed price and agreed £5200. The dealer now wants a £300 deposit. Is this reasonable? Personally I would prefer to pay a £50 deposit.
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I would think that 10% deposit to secure a car is not unreasonable. This would be £520 on your car so no, £300 or 5.8% does not seem unreasonable to me.
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As a holding deposit, £100 would be okay, £200 reasonable and £300 is pushing it but not too bad if the deal is straight up. As a finance deposit, 10%+ is not unreasonable to ask depending on how they profile credit risk.
Why do you want to pay such a small deposit? Is it because you are waiting to do HPI checks, an AA/RAC inspection, etc., or are you waiting for finance or the sale of your existing car over an extended period?
If the deposit is conditional on the car's passing some tests over the next couple of days, £300 seems a little high but not worth worrying over if you can afford the £5200 total, but it does seem a lot if you are merely waiting for an HPI check.
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I think a fair deposit reflects the amount the dealer is likely to lose in re-advertising, demonstration time, etc., if he holds the car for you and you then drop out of the deal. Percentage doesn't really come into it because these losses are likely to be similar whether the car costs £2,000 or £10,000.
I would say that £300 is not unreasonable in this case.
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The function of a deposit is surely to make sure that you really intend to buy the car and make it worth the dealer's while if he turns away other buyers in the meantime.
And why are you worried about the deposit amount anyway ? If you're going to buy the car then you'll pay it anyway, and if you're not sure that you will buy the car, then don't put a deposit down.
Unless, of course, the sale is dependant on an HPI check or some repair or other.
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Thanks guys - just wanted to get a feel for what was sensible. I've paid the £300 now and arranged for an AA inspection on the understanding that if the AA say that I shouldn't buy the car then I can get the deposit refunded. Both the garage and myself think this is highly unlikely but it will be interesting what the AA find.
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Was this a main dealer? - if so £300 is quite low. They would normally ask for £500 as a matter of course. I was buying a SEAT and it had a dent in the driver's door - rest of car was superb. I had to pay £500 and wrote subject to satisfactory repair on the order.
Repair wasn't good enough so I rejected the car and got the deposit back.
Get the value out of the AA report and get those little jobs done for handing over the rest of your money.
Best of luck!
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I think a fair deposit reflects the amount the dealer is likely to lose in re-advertising, demonstration time, etc., if he holds the car for you and you then drop out of the deal. Percentage doesn\'t really come into it because these losses are likely to be similar whether the car costs £2,000 or £10,000. I would say that £300 is not unreasonable in this case.
Well said, your common sense prevails !
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I've just bought a used vehicle from a main dealer and as a matter of course enquired how much deposit was required. The salesman said that a deposit wouldn't be necessary and to bring the balance with me when the car was ready to pickup the following week.
On the other hand another salesman whose vehicle I was interested in viewing asked me to put down a £200 holding deposit by credit card. i was told this was so they would take the car off the market and to guarantee they didn't sell the car before I could view on the Saturday morning. I should note this conversation took place on the friday afternoon and the car was also at a main dealer. I must admit I felt uncomfortable with this arrangement and didn't pursue any further.
Jimmy
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Well, i haven't put a penny down on my new Fiesta, but that's because I used the old car as part ex and told them that I didn't have any money to put down :)
Not a probem though, and they're taking a risk, 'cos they're registering the car in my name when it arrives, so god knows what would happen if I pulled out of the deal... I've signed all of the paperwork so I imagine that they would chase me for loss of profit? (Not that I'm thinking of dropping out, I can't wait to get my hands on it!)
Blue
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You need to understand that you have entered into a contract to buy (subject to whatever you agreed ie HPI etc).
If you back out, the dealer is entitled to sue you for breach of contract.
Most don't bother and just keep the deposit, but it's an option open to them.
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It's a main dealer that I'm buying this car from. My verbal contract is subject to a satisfactory AA inspection so if the AA man does not like it, then I expect to get the deposit back. Maybe I'm being naive in expecting to get the deposit back.
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Yes, if you have no witness and No if you do.
It could come down to your word against that of the salesman (and his commission).
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Pay by credit card - this will give you some protection over the whole deal. Any purchase wholly or part paid by Credit Card (over a £100.00) makes the Credit Card liable if it all goes horribly wrong.
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The AA man inspected the car today. He thought it was in excellent condition and the only fault he found was a crack in the windscreen that will need fixing or replacing. Not bad considering the car has done 62k miles. I thought it was a good car when I first saw it but I was pleasantly surprised he didn't find anything else. The garage do not seem keen to fix the windscreen although the AA man thought they should.
I think the AA inspection idea is a good one but there's always a danger that the car will be sold to someone else unless you pay a deposit before the inspection and take the risk. Having been looking for a car for several months and being fed up with all the dross I've seen, I didn't not want to let the one which I thought was right get away. However I was still concerned about the size of the deposit I was risking. I was very aware however that the dealer was very keen to sell the car for his month end bonus. On the dealers website it's listed at 6495, on the forecourt it was 5995 and I got it for 5200. Now the garage are very reluctant to concede anything else. I'm even having to pay half of the cost of the next service which is due in the next 1000 miles.
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He is entitled to sue for breach of contract, but only if he has suffered an actual loss.
For instance, had Merlin agreed to pay £6495 for the car and backed out before the car was actually sold for £5200, the loss would be £1295 plus any extra costs. That £1295 is actually quite a large difference - almost certainly the car wasn't worth that much more to start with. They certainly couldn't just punt it through the auction and say that was the best price they could possibly have obtained with no evidence.
In theory, the dealer could ask for 'specific performance' - i.e., compelling the first buyer to buy the car, but this would only really be granted when financial compensation would be inadequate - i.e., it'd be virtually impossible on the sale of a car.
In the real world, when the buyer backs out, the difference between the price that buyer offered and that offered by the eventual buyer is unlikely to be more than a couple of hundred quid and might well be covered by any deposit paid. Even if it's not and there is a rock solid paper trail of evidence, it's really not worth the effort to sue on it as that time could be better spent selling another car!
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