Let's say you put money down on a car, and then have second thoughts about the purchase and want to call the whole thing off. Can you do that, once you put down that good-faith deposit? Or can you back out gracefully and expect to get your deposit back? In most cases the law is on your side even if you sign a purchase agreement, though the dealer may tell you otherwise. State laws may determine whether you're required to get your deposit back.
Are You Stuck?
The seller might tell you that you can't back out now, but he's not telling you the truth. He can't hold you to your purchase. If you try to cancel the deal, he may tell you that you can't, or that the money isn't refundable. It's a tactic to separate you from your money. Even if you sign a purchase agreement and need time to apply for the loan, the dealer can't hold you to the deposit or force you to buy the vehicle.
Why Pay a Deposit Anyway?
If the dealer doesn't have the car you want in stock, he'll commonly try to work out a swap with another dealer and ask you for a deposit. Make sure he's not just stringing you along, and that the car really exists, before putting a deposit down. Get the vehicle ID number (VIN) from the dealer. The dealer may also ask for a deposit if he has to place a special order with the factory, or if it's a custom-made car. In those cases, the deposit may not be fully refundable, but you can still back out.
Don't put money down on a car until you're ready to make the down payment. If you do put a deposit down, let the seller know exactly what it is — a refundable deposit. Get that in writing. Insist on a receipt, with it plainly labeled as a refundable deposit. If the seller balks at that, you don't need to do business with him. If the dealer tells you the deposit is a partial payment, don't fall for it. It's a deposit, nothing more. Don't use cash if you pay a deposit; there's no real paper trail. Use your credit card instead. That way it's easier for you to cancel the deal.
If the Seller Gives You Static
If the seller plays hardball with your money, send him a letter requesting your money back. Building a paper trail is important here. If that doesn't work, you may want to talk to a lawyer or place a complaint with the Better Business Bureau. Let the dealer know you will do this, however. He may decide to back off to avoid any ramifications.
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