Are Deposits on Ordered Goods Protected

mike88

What happens if you place a large deposit on a vehicle and the dealer goes into liquidation before the vehicle is delivered. Are there any FSA rules that require the dealer to ring fence this money in order to protect consumers?

I have a suspicion that the money is not protected and the purchaser becomes an unsecured creditor of the liquidated Company but all my googling has not revealed the definitive answer.

Can anyone help?

4743hudsonj

mike88 wrote: »

What happens if you place a large deposit on a vehicle and the dealer goes into liquidation before the vehicle is delivered. Are there any FSA rules that require the dealer to ring fence this money in order to protect consumers?

I have a suspicion that the money is not protected and the purchaser becomes an unsecured creditor of the liquidated Company but all my googling has not revealed the definitive answer.

Can anyone help?

how was the deposit payed

if cash get in line behind all the other creditors

if debit vsa and i think mastercard offer chargeback services but i have no idea if this is included so its worth waiting for others to clarify this or ring the card company

if credit card or other form of credit, you can claim under section 75 of the consumer credit act as the credit giving company are jointly and severably liable for payments towards goods amounting to over £100, and as you havnt received goods for your payment they are responsible for refunding you

more info?

mike88

The deposit was paid in cash but for financial reasons I also handed an existing vehicle that I was not using in part exchange. The total amount was around £20,000. I was told by another dealer that all deposits were ring fenced and I assumed all operated in the same way.

The dealer is one of the largest in the industry and I do not have any real concerns but if I knew then what I know now I would not have handed over such a substantial deposit.

The dealer

4743hudsonj

tbh they may well be but i dont know about it

theyre not protected in other markets but may well be, maybe seek a free 30 min consultation with a solicitor or see a financial advisor?

in future though its highly advisable to pay on credit card even if you have the cash. it offers extra protection against this.

maninthestreet

mike88 wrote: »

The deposit was paid in cash but for financial reasons I also handed an existing vehicle that I was not using in part exchange. The total amount was around £20,000. I was told by another dealer that all deposits were ring fenced and I assumed all operated in the same way.

The dealer is one of the largest in the industry and I do not have any real concerns but if I knew then what I know now I would not have handed over such a substantial deposit.

Sorry - you handed over a vehicle you owned to them, even though this was not going to be used in part exchange??? Please tell us why you did this?

4743hudsonj

maninthestreet wrote: »

Sorry - you handed over a vehicle you owned to them, even though this was not going to be used in part exchange??? Please tell us why you did this?

i interoperated that as the op wasnt using their old car

so they DID use it as part exchange

makes more sense.......

Tozer

This is a complicated area and, frankly, you are not going to get decent advice from a solicitor for free in 30 minutes.

The dealer may have a special deposit account that would be ringfenced although I doubt it. If you can 'trace' the money in the account then you may be able to assert to the liquidator that it has remained your money. They will say that it has now been mixed with the general assets of the company and therefore you are an unsecured creditor. There are some massively complex rules on this sort of thing.

Regarding the car, you ought to reassert title to it until such time as the transaction completes. In this way, it remains your property.

mike88

Thanks for the replies so far.

I'm not overly concerned as the dealer is one of the largest in the industry. This particular dealer did not say the money was ring fenced. Another one did and I assumed this was standard practice. Having read a few things I do not think this is the case.

My vehicle was classified as an early part exchange. The dealer already had a buyer for my vehicle so I got an incredibly good deal. The arrangement also partly protected me from the VAT increase(s) in the new year as I shall only pay the increase on the balance between the deposit and the amount outstanding. By entering into this arrangement I saved around £4000.

I do not need a solicitor because, as things stand, there is no problem. But as I said if I knew there was no protection I would not have enetered into this arrangement.

However, it does seem to me that there should be a level of protection for deposits on goods not received and I'm surprised such legislation does not exist unless that is someone comes up with a view that is contrary to those expressed so far.

Willsnarf1983

mike88 wrote: »

Thanks for the replies so far.

I'm not overly concerned as the dealer is one of the largest in the industry. This particular dealer did not say the money was ring fenced. Another one did and I assumed this was standard practice. Having read a few things I do not think this is the case.

My vehicle was classified as an early part exchange. The dealer already had a buyer for my vehicle so I got an incredibly good deal. The arrangement also partly protected me from the VAT increase(s) in the new year as I shall only pay the increase on the balance between the deposit and the amount outstanding. By entering into this arrangement I saved around £4000.

I do not need a solicitor because, as things stand, there is no problem. But as I said if I knew there was no protection I would not have enetered into this arrangement.

However, it does seem to me that there should be a level of protection for deposits on goods not received and I'm surprised such legislation does not exist unless that is someone comes up with a view that is contrary to those expressed so far.

I'm trying to work out how you saved £4k by paying a large deposit down because if we say the VAT goes to 2.5 that is an extra £500 saved surely and even at a 5% increase you only save £1k. I would have also tried to have negotiated that the contract is for now thus you should be paying the 15% rates because you can be pretty sure that the car supplier will only be paying the 15% rates!

Will

mike88

Willsnarf1983 wrote: »

I'm trying to work out how you saved £4k by paying a large deposit down because if we say the VAT goes to 2.5 that is an extra £500 saved surely and even at a 5% increase you only save £1k. I would have also tried to have negotiated that the contract is for now thus you should be paying the 15% rates because you can be pretty sure that the car supplier will only be paying the 15% rates!

Will

I got an additional £1000 for the vehicle for trading in now because they had an immediate buyer and an additional £1000 off the vehicle I've purchased. Then there is the saving on Vat which is payable on the balance which at 20% will save a further £1000+ coupled with the savings in taxing, insuring and maintenance of the vehicle I part exhanged as the annual service was overdue as well as the rebate I received on 11 months tax. The total saving is in excess of £4000.

The VAT will be payable by the dealer at the rate payable at the time he has sold the vehicle. Dealers do not pay for vehicles until after they have been sold.