Used Car Deposit Refund Law in the UK

When it comes to used car deposit refund law in the UK, there are a few different areas to look at and a lot of misconceptions about what should happen. The fact of the matter is that, unless there are specified and agreed to circumstances, a deposit is non-refundable unless the purchase is off-site (and you use your cooling off period), or if the dealer cannot provide the vehicle through no fault of your own. That’s the general outline. Get a copy of the deposit agreement here.

Looking more in depth, however, there are multiple situations where you may need to use your knowledge of used car deposit refund law to try and get yourself out of a tricky situation. We’re here to look at some of the most common, and tell you what’s likely depending on what’s happening. Simple way is always arrange in writing refundable deposit. Arrange vehicle inspection before purchasing you new vehicle to make sure vehicle is as described.

What is a Car Deposit

Generally speaking, a deposit is when money is provided to the seller of a vehicle as a way to secure a vehicle and show an intention of purchase. It often means that the dealer will prevent any further viewings or test drives of the vehicle, and make sure no one else can buy it. It’s a commitment from you for the purchase.

The interesting thing about the deposit is that it actually benefits both parties. Not only does it mean that the car you want to buy is safe and not going to get stolen away from you, but it also helps the dealer, too. Like in most business cases, a deposit being paid is a commitment to the car and is a cash value protecting them and their business. 

It takes time to prepare a car for a sale, have all the admin done, draw up contracts, pay staff and salespeople… The list goes on. If people were able to simply back out of a deal after days or even weeks of preparation, that’s a big loss for dealers. That is not a realistic way to run a business. This is why in most cases, you can’t get it back. It’s an insurance policy, essentially.

If the Buyer Cancels the Deal

The best place to start is to look at used car deposit refund law in the UK when it’s the buyer who wants to cancel the deal. that’s usually through changing their mind, or even through a change of circumstance. In this case, unless there’s a really good reason and the dealer has agreed to accept it, you don’t really have much that you can do. Chances are, the money is gone, and it’s on you for voiding the contract of the deal and cost the dealer time and money. It’s tough to argue.

There are, however, a few specific situations where buyers do have more rights with their deposit and purchase:

Online Purchases

Online purchases of pretty much any kind are subject to a cooling-off period as of the 2015 Consumer Rights Act. This means that if the car is bought without seeing it, like over the phone or online, the buyer has 14 days to reject their order and get a full refund.

Car Finance Agreements

The second special situation where there may be more options available regarding used car refund law in the UK is if the purchase is intended to utilise a car financing service and something goes wrong. When the funding is pulled from the deal, in many cases, the dealer will provide a full refund to the customer, no questions asked. Although this isn’t always a legal agreement, it is a very common practice.

If the Dealer Cancels Deal

In some rare cases, the dealer will have to cancel the purchase of a car rather than the buyer. Some examples of this happening are if the manufacturer has stocking issues or a recall, or alternatively if the car has been sold to another buyer (which can happen even with a deposit). Of course, the buyer has no input in these situations and is actually the one being inconvenienced, and they are entitled to a deposit refund as a result.

If the Car has a Fault After Purchase

Another interesting angle to understand is that according to the 2015 consumer rights act, the vehicle should be of satisfactory quality. If it isn’t, then the deposit again should be returned to the buyer. This has to be proven to have been the case pre-purchase however. If proven and agreed upon, the vehicle can be rejected within 30 days, and the deposit should be refunded. When that’s after 30 days but before 6 months later, this may also be the case if a repair or replacement isn’t possible.

If the Car is Bought From a Private Seller

One more situation where used car deposit refund law in the UK is a little bit muddled is with private sales of vehicles. If a buyer leaves a deposit with a private seller, the same rules do generally apply as they do for buying from a dealer. The difference is, they are much harder to enforce. The seller not having a business or professional standards to follow means that getting it back can be a nightmare and may require the court, as well as proof. If you are going to leave a deposit, it’s always advised to get a receipt and terms of the deposit too. If you don’t trust the seller with the deposit, perhaps you shouldn’t trust the car either (unless it has been inspected). 

Conclusion

All in all, used car deposit refund law in the UK is a hard thing to get around, and it normally comes down to the buyer losing the deposit if they change their mind. The general advice in this situation is to only buy a car you know that you’re happy with and feel confident in driving. Take any precautions that you need to in order to protect yourself before paying the deposit, but once it’s paid, be prepared to go all the way, or lose the deposit. Deposit agreement copy here.

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