Consumer Protection Facts

Deposits
 

Everything you need to know about deposits and the importance of written deposit agreements

What's it for? 

In law, a deposit usually shows a dealer that you intend to go ahead with a purchase. If that is not the case, do not leave a deposit on a vehicle.

If you complete the purchase, the deposit must be applied to the purchase price of the vehicle. The deposit becomes a down payment or partial payment.

However, in some cases, a deposit may be a fee for services, such as to:
 

• Hold the vehicle for some time
• Bring the vehicle in from another dealer
• Bring the vehicle directly from a manufacturer
• Arrange financing for the vehicle

 

Protect yourself: Get a deposit agreement in writing 

Before leaving a deposit, ask the dealer to provide a written deposit agreement. This is a best practice at many dealerships, but is not required. The agreement should include this information:

• What the deposit is being taken for
• The amount of the deposit
• Whether the deposit is refundable or non-refundable, and under what terms
  • If the dealer can’t provide the vehicle (or any other promised services), the deposit amount should generally be refunded
• Any other terms of the deposit, such as:
  • Is the deposit amount applied to the purchase price of the vehicle?
  • When will the vehicle be delivered or available?

Make sure you understand all the terms in the deposit agreement. Don’t forget to take a copy with you before you leave.
 

Warning: Common law rules will apply if you have no written deposit agreement

• Your deposit will be seen as your commitment to complete the transaction
• If you do not complete the transaction, the seller can keep 100% of the deposit, even though they have suffered no damages
• If you do complete the transaction, the deposit must apply towards the purchase
• If the dealer does not complete the sale, you are entitled to a refund of the deposit

 

Helpful links to information about deposits

• Sample deposit agreement 
• Section 10 of the Vehicle Sales Authority General Guidelines 
• Answers to common consumer questions about deposits available at the website of the Office of Consumer Affairs

If you have any questions, please contact VSA Consumer Services.

NOTE: This is to provide general information and is not intended to be legal advice.