Car Dealership Question - what is the deposit supposed to achieve?

Me and the wife went to buy a car today at a rather big dealership. Not a very pleasant experience, and there is one thing that is bothering me.

When we filled out the info for the finance people to submit to banks (there were problems with our credit that prevented immediate financing) they asked us to write them a check for $500 as a deposit that they would not cash, for them to hold the car for us. I asked them what that deposit was for, i.e. did they keep it if we did not buy the car. They said no, if we couldn’t get financing or decided not to buy the car we got the check back. I asked, hypothetically, under what circumstances would they KEEP the deposit. They said it was if we kept the car, but in that case they would just give us back the check and we would cut a new one for the down payment.

This makes no sense to me - why would the need a deposit to hold the car when they would just give it back if we didn’t get the car? I’d think if I was going to hold something for someone who was going to buy it, the deposit would be to make sure they didn’t waste my time and keep me from potentially selling it, and that I would keep it if they backed out. This sounds fishy - I am pretty sure from what I saw on the credit report that they aren’t going to be able to finance it, or at least not with payments we are happy with. Anybody in the business know what’s up with that?

My take on the situation: They have your money, therefore your interest. They know they will be able to get you back to the dealership since they have those things. If they aren’t able to get you financed on your terms, they will probably try to pressure you int a longer term, higher payments, or a lesser car, just to make the sale. I think that is shady, and is a subtle form of sales pressure. I say take the check back, and take your business to someone who will appreciate it.

Perhaps you should check out Edmunds and Carpoint. At least you can do your ordering online and get as good a deal as you can without having to worry about a shady dealer using your own money to lure you back to their establishment.

I am sure others will be along with their opinions and advice, too. Listen carefully, and good luck! :slight_smile:

Standard sales technique. Once you’ve put down a deposit, the sale is in progress, it’s psychologically harder to back out of the deal. Its just a way to try to close the deal, and make the customer stop thinking about buying from someone else. You’re hooked.

Hmm, I may stop payment on that check, just to be safe. I don’t think I’m going to buy a car from them, even if they are able to get me financed.

I thought it was pretty odd that they asked for that without any kind of explanation as to why, and when I asked the salesman seemed at a loss for words.

What would my legal recourse be if they tried to cash it? I didn’t sign anything, just provided the basic info they needed to check my credit.

I just read an article in the local newspaper yesterday about buying a car and there was a list of things to watch out for. High on the list was this deposit scam and the advice given was to refuse to pay it and walk out if they insist on it. It’s a sales trick to get you more committed. The gist of the article was that you are doing them a favour by buying a car from them and there are lots of other car dealers that want your business.

I really can’t help you on the car deal, but in my situation as a property manager or landlord if you will, you agree to buy or “rent” a certain place from me, but it will take you several days to arrange the cash to really make the deal. I want a deposit to hold the place for you or if I was a car dealer and you wanted a particular car, I too would require a deposit. Sure, it is a way to keep you committed. You said “that’s my car and I want it if you can figure out how to finance it for me.” If you want them to keep that particular car until your credit check comes through, you should be willing to put up a deposit until the deal goes through.

It is wrong of the seller not to have a WRITTEN POLICY regarding the return of security deposits. If you do put one down you should require at least that.

Also you would be smart to know what your credit report might reveal before you ever to out to purchase anything.

Bottom line, if you are not willing to put up a cash deposit for a particular car you want, don’t expect it to be there for you tomorrow.

Good luck! If you get it, take care of it and drive it forever!

I think I got hit with #10. This really pisses me off.

You’re going about your purchase the right way forewarned id forarmed. Always demand to see it in writting and I liked number 10’s advice…Leave your check book at home!

I always refuse to leave a deposit. I’ve never had a dealer not order the car for me, or not put it on hold. I know they put a tremendous amount of pressure on you to do so, but you simply do not have to.

I had a dealer once refuse to give a deposit back on a new, 1988 Honda I ordered. This is a case where it was entirely not my fault. The car was ordered, and was due in two weeks. They asked for, and I was browbeaten into giving, a $500 deposit. Two weeks went by - no car. They said to wait two more weeks. Then that time arrived - still no car. After more than 2 months, with still no car and no guarantee on it ever arriving, I went and asked for my check back.

They took me into the manager’s office, where he tried to convince me that I had entered into a “contract” by making the deposit (a flat-out lie), and actually told me that they could keep the deposit until the car came in. He had a great big smile on his face too, that I never forget every time a car dealer approaches me now.

So I left the dealership, fighting back tears of shame at being so weak and stupid, and didn’t know what to do. So I called the police.

Thankfully, a very nice and understanding officer showed up to my silly call, listened to me, took the time to go to the dealer with me, walked straight in to the Honda dealer, and in front of a crowded showroom said:

“Give her the check back or you’re going to jail.”

I never saw anyone move so fast to get a check. It was very satisfying. Now that I am much stronger, I don’t take any shit like that from dealers. And neither should you.

That is a different situation. A property owner has a right to ask for a non-refundable deposit to hold a property. A car dealer who does this is engaging in unethical sales techniques.



While that must have been, at first, an awful thing to have to go through, it sounds like a really good experience now, looking back.

Buying “Big Stuff” (cars, houses, etc) is difficult for most people because they do it so infrequently. It’s terrible that the sellers try to capitalize on this… your story will help others feel more comfortable. Thanks for posting it.


If you’re tenacious, you can make it work FOR you, as well.

When Mrs. Kunilou and I bought our previous minivan, we chose one of those fast-talking dealerships (our mistake, but that’s not important). We found the model we wanted (which was in somewhat short supply), signed the papers and left a sizable deposit while we went to the bank to get the loan for the rest of the price.

When we arrived, lo and behold the dealer had to make a slight substitution and offered us an identical van, except for the pinstripes, which they would sacrifice for only an additional $99 dollars.

We refused and told them to give us either the van we had originally agreed on or to give us the pinstripes at no extra cost. They refused. We pointed out that when they accepted our deposit, they sealed the deal, and they could either give us back the deposit or see us in court.

More than a couple of times I showed them the check for the balance, and told them they could have it all or none of it.

We remained the voice of reason, telling them they could sell the minivan to whomever they wanted at whatever price they wanted. All they had to do was make a decision. Give us the minivan at the price we agreed on – sealed by their accepting our deposit – or give us our deposit back. We actually got up to leave twice and they dragged us back in. After two hours they gave up and agreed not to charge us for the pinstripes. They also didn’t charge us the “documentation fee,” “title transfer” or any of those other nickel and dime charges you don’t see until you get the actual sales contract.

I don’t recommend this method of doing business, but there’s always something about the threat to call the police, the district attorney, the state attorney general and the TV station’s consumer helpline to get the deposit back which tends to make some crooks a little more willing to stand behind their word.

Always maintain control with a car dealer. When I went to collect the paperwork from my credit union the sales manager said they would need a deposit so they wouldn’t sell the truck before I got back the next day. I simply said “no you don’t. You won’t sell it.” Silence. His dumfounded expression was priceless but he didn’t have a thing to say in reply. It was like using the force. It was all I could do to keep from adding “these aren’t the 'droids you’re looking for.” :smiley:

Well, we ended up buying a car from them. They actually financed us, but at 17.9% APR, I now have a $450 payment for 5 years - which adds up to $27,000 for a $15,200 car (with $2000 down payment) but I won’t pay that - I made sure with the finance guy that there was no penalty for paying it off early - with the payment that high I plan on paying off the balance when I get my bonus check in June, will have wasted $1080 paying interest up until that point but I guess it’s worth it to have the car now (my wife recently totalled her old one).

I feel like I compromised my dignity by dealing with them after they pulled that deposit crap on us, but asking around I haven’t found a person who didn’t when they bought a new car and had to wait, so it’s not like I was victimized more than your average non-savvy new car buyer. My wife got upset when I told her I did not want to buy a car from them, she thought I was unhappy with her choice of car (we could have saved $3000 by downgrading 12 h.p., losing the sunroof and CD player, and picking a color my wife didn’t like) and I was using this as an excuse to not get the one she wanted. She’s happy now, though.