What you should know about putting money down or a deposit on a car purchase. Purchasing a vehicle these days has become such a pain. Buyers want to browse and continue to shop around but do not want to get serious about a vehicle but also don’t want the seller to sell the vehicle. At the same time the seller wants people to be interested and purchase the vehicle however not be too pushy as it will scare off the buyer. This is where deposits or money down comes in handy.
I recently interviewed and picked the brain of Bryan Brody from Brody & Cornwell. Mr. Brody is one of the top consumer law attorney’s in Missouri regarding lemon law, misrepresentation, dealer fraud and credit fraud. Mr. Brody had a few very helpful pointers that car buyers should definitely pay attention to! His main quote was this “A down payment may not mean as much to a consumer as they actually think”. He also says “the better, and safer practice is to make an agreement with the dealer in writing”. Mr. Brody also plainly states that only make a deposit on a car you are certain you want to purchase.
Make sure your deposit is unconditionally
refundable and make sure that it is in writing.
Let’s face it. Salespeople are all about the $$$ even if it is just a couple hundred bucks. If they think they can wiggle out of refunding your deposit they will try and do it. Never take a verbal gentlemen’s agreement or handshake contract if anyone tells you a deposit is refundable. Mr. Brody stated that in Missouri, a down payment or deposit is not binding unless it is in a written form of agreement with signatures. Always be sure to get it in writing what you are putting down and that it is refundable. This goes for private sellers as well, not just dealerships. Protect your money down… Protect yourself.
Stand Up For Yourself at the Dealership
Car sales people are highly trained, drilled and almost brainwashed in how to get you to purchase a vehicle. Even worst, some of them are trained at how to get you to pay even more than what they actually are asking. Check out this video from Kevin Hunter on dealership sales tactics and be sure to stand up for yourself!
Make sure you place conditions of refund of your deposit such as repairs performed, passing an inspection or finance approval.
Much of the time we put money down on a vehicle to “hold it” or so the seller won’t sell it out from under us. Most of the time we are ready to purchase the vehicle but there may be some repairs that need to be addressed before we finalize the sale or maybe we are pending on finance approval. If the seller is willing to take a deposit and hold the vehicle but is not willing to do a full refundable deposit then request it be refundable with agreed conditions AND be sure to put those agreed conditions on paper, while you are at it, make sure you get a pre-purchase inspection!. While this may make the consumer “feel better” about their down payment, there is still no requirement for the dealer or seller to “hold” the vehicle for you. If the agreed conditions do not get met, the deposit gets refunded and everyone goes on their merry way. If the conditions do get met then the sale gets finalized and everyone goes on their merry way. The first thing Bryan Brody said about deposits and putting money down is that dealerships have no requirement to hold a vehicle for you, regardless of an agreement. The only thing you can do is get your deposit money back. IF IT WAS WRITTEN DOWN AS AN AGREEMENT AND SIGNED!
Make sure you are 100% ready to purchase if the down payment is nonrefundable.
Some sellers and dealers are sticky about money down deposits as they are supposed to be a way for them to lock you into the purchase and make sure you are serious. Some want a certain percentage of the asking price on a credit card and they will not agree to the deposit being refundable. In cases such as this you can push back harder to add conditions to the deposit to make it refundable or just be 100% certain this is the vehicle you want to purchase and you are ready to finalize the sale.
What if the dealer sells the car out from under me even with a deposit?
Hopefully you can get your deposit back. Mr. Brody says the only recourse you really have is to get your monies back in which you placed your down payment. This of course assuming that you had a WRITTEN AGREEMENT which was signed by both parties. In Missouri the only damages which you could actually claim for the dealer selling the vehicle is the actual $$$ which was placed in down payment. Again, only if there was a written agreement signed by both parties.