The Car Buying Guide for Extreme Savers

How to Protect Yourself When Leaving a Deposit

There are certain situations when a dealer will ask for a deposit to make sure you're serious about purchasing a vehicle.

Sometimes dealers will try to get a deposit solely to keep you at the dealership or to wear you down until you agree to purchase. There are only 3 times you should ever have to give a deposit on a vehicle.

The first is if the dealer doesn't have the car in stock but is willing to swap vehicles with another dealer (called a dealer trade), the second is if the dealer special orders a car for you from the factory, and the third is to hold a vehicle for a certain amount of time AFTER you've negotiated the price.

Although I don't recommend doing a dealer trade, if you do, make certain the dealer has located the exact vehicle they will be trading. Have them write down the VIN # and the exact specifications of the vehicle.

Sometimes dealers will lie just to string you along until they (hopefully) locate a vehicle for you. This usually happens with cars that are in high demand and low supply, so don't ever leave a deposit unless they can show you the exact vehicle and the date it will arrive.

If you're ordering a car directly from the factory, you will be required to leave a deposit. There's usually no shenanigans involved here - but make sure you read the fine print carefully. The deposit may not be refundable if you change your mind.

Lastly, a dealer may ask for a deposit to hold a vehicle for you after a Purchase & Sale Agreement has been signed. They want to make sure you're serious about buying the car before they will agree to hold it for you. This only happens if you need time to gather payment for the vehicle or take out a loan. Usually, this is legitimate, but make sure you're leaving a fully refundable deposit and not a partial payment.

Some dealers will have you sign a form with the "deposit" listed under "partial payment". Don't sign that unless you are absolutely certain you will buy the car.

You should always leave deposits using a credit card. You can always dispute the charge through the credit card company and it just makes getting a refund less of a hassle.

My Recommendation for New Car Shoppers

TrueCar No-Haggle and Edmunds Price Promise are the quickest way to see the lowest prices available on new cars in your area. Both tools provide upfront prices from local dealers, and the deals are usually really good. It should be the first step you take when negotiating car prices. You should follow that up with my checklist to make sure you get the best possible deal.
- Gregg Fidan

Gregg Fidan

About the Author: Gregg Fidan

Gregg Fidan + is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.

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