Return deposit

DelSan

When I purchased my most recent car. My son contributed £2,500 towards deposit as he wanted a higher spec car. I pay 2/3 of note and he pays 1/3. I plan to trade in for another car within next 2 years but my son is asking for refund of his deposit arguing it his equity in car as he won’t be involved in next car purchase. I’ve explained deposit helps to lower monthly payments and car won’t appreciate in value so neither of us would get any deposit value back. He says when we traced car in. Whatever equity is in car, he feels he’s entitled to a oration but at least value of his deposit. I’m prepared to give him something but am I legally bound to “buy him out”. He’s not listed as part registered keeper or on car loan. 

biscan25

Legality is moot unless he intends to sue you.
I'm reading that you share use of this car? If not you should definitely give him £2,500 as he has loaned you it.
When you trade in you'll get an equity value for the vehicle. If your son contributed 1/3 to the payments as well as the deposit, he should be entitled to 1/3 of this value. If not it's more complicated but not impossible to work out the relevant shares.

DelSan

Yes we share use of car but he drives it substantially more than I do. He puts 500-750 miles a month on it while I put less than 100. He puts £200 towards note and I pay a bit over £450 plus insurance. So my thoughts are his minimal amount while heavy use uses up his deposit as it’ll affect value if it has higher mileage 

Brie

So he wanted a fancier car than you did, he uses it more than you do, he pays less monthly than you do and he paid less towards the initial cost than you did.  And he wants all of that initial amount back? 

I think you should do a cost analysis based on all the use vs payments made and tell him he can get back £2500-X-Y-Z when you sell or trade the car on the basis that he gets no say in the new one and isn't allowed to use it.  Maybe then he will realise what a sweet deal he's got.

Herzlos

Being completely fair, you should work out the real monthly cost of the contract ((deposit + ( payment x number of payments)) / number of payments), and split that based on use. Him putting about 85% of the miles on means he'd be paying 85% of the monthly repayments.

If you wanted to get petty you could factor in the insurance (he's almost certainly a higher risk).

He's already getting an incredible deal out of it.

Or you could just "buy him out" by giving him the deposit back and taking him off the insurance. He'd then need to find his own transport.

JJ_Egan

Legality no as you never drew up a contract .

Personally i would buy him out at £2,500  less cost of using the car/ depreciation .

Equity in a car depreciates with time and mileage .

Grumpy_chap

This seems like a car part-owned by son and part-owned by parent.  Use of the car is shared.  Parent pays the insurance.  Ignore the differential use of the car and the insurance contribution - put that down to parental support.

It is not clear how long the car has been owned, so I'll assume three years.  That would mean:

Son paid £2,500 plus 36 x £200 = £9,700 = 37.5% of total paid
Parent paid 36 x £450 = £16,200 = 62.5% of total paid
Total Paid £25,900

When the car is sold, parent gets 62.5%, son gets 37.5%

Assuming I understood the situation correctly, that seems simple enough to me.

DelSan

Thanks everyone. I plan to give him something when I change cars but your guidance has helped a lot. 

peter_the_piper

I hope he's put down on the insurance as the main driver.

Sandtree

JJ_Egan said:

Legality no as you never drew up a contract

A contract exists when there is an offer, acceptance and (outside of scotland) consideration (aka payment). A contract doesnt have to be written to exist, just written contracts are much easier to debate as there is evidence as to what the parties agreed to. Verbal contracts are just as binding but much harder to prove what the terms were.

It sounds like the OP was intending to buy a new family car and their son agreed to pay extra to upgrade the car both in the form of a deposit contribution and towards the monthly repayments. The OP now unilaterally wants to get rid of the vehicle which the son would like to keep and is presumably arguing they wouldnt have contributed the £2,500 had they been told the car would only be kept for X years. 

pinkshoes

How old is your son? I'm not sure he grasps the concept of depreciation of value...

Personally I would sit down NOW with him and go through the car finance. Show him how much the car depreciates depending on age and mileage, and how much in 2 years time you'll expect to get for it, and what becomes of his £2500 (e.g. reduced to much less!).

If he is NOT ok with this, then I would consider selling the car now, then buying your own cars.