Using Deposit Money As Collateral

MikeC1990

Hi there, I'm not sure if this is the right place to ask this so please redirect if needed

About 6 weeks ago I put a £3000 deposit on a car I intend to buy. I had a discussion at the time with the dealer saying that all going well I should be able to come back at the end of the month to pay off the rest and complete the sale.

Unfortunately I've had some complications with banks and solicitors which means I can't quite complete the sale yet but I have every intention of doing so. Last week I had a phone call from the dealer who explained that as I hadn't returned to complete the sale they were going to put the car back on sale and that the £3k deposit I put down would be held by them and returned if the car sold at a lesser value than the value I had "reserved" it. Naturally I don't think this is fair.

Where do I stand here. I have every intention of completing the sale as soon as I can. There are obviously some personal financial things going on that while aren't directly my fault, I can understand why the dealer is a little impatient. I'm worried the dealer will flog the car £3k less than it's value to get rid and they still have their money.

Herzlos

Your best bet is to find some way to finance the car before the dealer sells it to someone else. You're doing pretty well if they've already held onto it for 6 weeks. That's 6 weeks of lost capital opportunity, space and finance payments they've needed to maintain.

If you can't finance the complete balance, can you speak to the dealer about making more payments to keep the car off the forecourt?

If you can't afford the car, then you can ask for the deposit back or whatever is left after he sells the car. It's unlikely to have lost much value in 6 weeks but the market has weakened a bit.

What's the car and price?

MikeC1990

Car is a Mercedes A Class for £17,750

I've had a conversation with the dealer in the last 5 minutes whom have told me the car has since sold. When I paid the deposit there was no mention of Terms and Conditions nor is there anything in the paperwork they handed over at the time

They had it on a well known automotive online website where I was tracking it, it disappeared from there yesterday at a price of £17,649. The dealer was unable to tell me how much the car sold for and cannot release my deposit without the authorisation of the person whom originally took my despite, who has moved to a different shop within the same company.

DrEskimo

Why on earth are you putting in such large deposit sums, particularly given you didn't even have the full fund available?!

I put down £500 on my last car, which was advertised at £15,800, so similar value. There is simply no need to put such a large sum down in future.

MikeC1990

Because I was serious about the purchase and had every intention of completing the sale. I had the full funds in principle I just needed transactions to complete.

I didn't expect the issues I had because I had faith in the people I was paying to get the job done.

With all due respect, I don't need you making me feel worse than I'm feeling right now. I just want to know where I stand so I can move forward.

The_Fat_Controller

If it was a dealer with multiple branches as you say, I sincerely hope you got a contract.

What does the paperwork say regarding the deposit ?

MikeC1990

Honestly very little. I have a receipt that's been signed by both parties. The paperwork I have is more of a sale agreement than a deposit agreement with a circle around the notes section that says "£3000 deposit paid - [last 4 card digits]

DrEskimo

MikeC1990 said:

Because I was serious about the purchase and had every intention of completing the sale. I had the full funds in principle I just needed transactions to complete.

I didn't expect the issues I had because I had faith in the people I was paying to get the job done.

With all due respect, I don't need you making me feel worse than I'm feeling right now. I just want to know where I stand so I can move forward.

My intention was not to make you feel worse, but rather to provide you information that in future there is simply no need to put down large sums. It will gain you nothing.

My understanding is that this is very much down to the dealer. I've backed out of new car orders where I have placed deposits (again, typically £500) and every time the dealer has been happy to refund me in full. But, the deposit is there for a reason and other than to kindly ask for a full refund I'm not sure what else you can do if they provide justification for why a full refund is not available.

It's probably worth waiting to see what the outcome is once they get back to you and then seek advice.

iwb100

I have to say this is a crazy situation. I’ve never put down more than £500 to reserve a car and there is a good reason for that. Partly I’ve never been asked to. Usually it’s £200 but now many dealers are taking far less.

I don’t really know why you would put down so much when the dealer wouldn’t have asked you to, but I’m afraid something doesn’t ring true about this to me. Was the issue that the dealer wanted more money because you knew it would take longer to secure the funds so they wanted a higher guarantee amount to compensate for the delay? If not then I don’t understand what the £3000 was.

However, you should be entitled to this back given that my assumption is that you haven’t signed anything to say this is a non refundable deposit and instead have just signed a sales agreement which hopefully means that eventually they will refund you the money.

saajan_12

iwb100 said:

I have to say this is a crazy situation. I’ve never put down more than £500 to reserve a car and there is a good reason for that. Partly I’ve never been asked to. Usually it’s £200 but now many dealers are taking far less.

I don’t really know why you would put down so much when the dealer wouldn’t have asked you to, but I’m afraid something doesn’t ring true about this to me. Was the issue that the dealer wanted more money because you knew it would take longer to secure the funds so they wanted a higher guarantee amount to compensate for the delay? If not then I don’t understand what the £3000 was.

However, you should be entitled to this back given that my assumption is that you haven’t signed anything to say this is a non refundable deposit and instead have just signed a sales agreement which hopefully means that eventually they will refund you the money.

totally unhelpful response.. 
DrEskimo and OP have already gone through the point re higher than usual deposit. 
You don't need a signed paper saying 'non refundable' - a contract can be verbal and a deposit is by nature non refundable unless you have proof otherwise.

The OP offered to buy the car for £17,750, the dealer accepted, and OP paid consideration of £3000 -> contract formed. If the OP now cannot buy the car in the time limit specified (or in a reasonable timeframe if nothing specified) then the dealer can sell the car on to mitigate losses and deduct the difference from the deposit. 

theoretica

But the other side also applies - the dealer agreed to sell the car to the OP - was that a time limited agreement?  Because it seems the dealer cannot now follow through on their side of the bargain...  So whether a time limit was specified seems crucial!