Using Deposit Money As Collateral

Jenni_D

saajan_12 said:

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. 

And therein lies the nub of the issue ... a (true) deposit is a reservation fee, and indeed this can truly be non-refundable. £500 for a contract price of £17,750 is still high but just about viable as being classed as a deposit.

£3,000 is consideration (part-payment) and there is no way this can be classed as a true deposit. Therefore either the OP is in breach of contract or the seller is in breach. (Was there an agreed sell-by date?) Either way the seller is not entitled to hold on to the whole amount - they can only deduct an amount they have lost due to administration and other losses caused by the OP's breach (if indeed they have breached), but they need to quantify this and can't just keep the lot until some arbitrary time for them to locate a random person in their organisation.

IMHO IANAL etc.

iwb100

saajan_12 said:

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. 

Sorry but I disagree. My post was to try and understand the basis on which £3000 has been paid. Because that is still unclear. And the OP only seems to have a sales agreement which as pointed out below means that the £3000 was paid contingent on sale. Unless there is wording that ‘if we sell the car to someone else or you don’t buy it by x date we keep your £3000’ then it would be hard for dealer to argue that the £3000 was legitimately theirs to keep. If tested in court. But I was asking whether this was in effect a ‘reservation fee’ which could change things again. It’s hard to understand and still isn’t clear why someone would pay as much up front again the reason for this matters potentially. 

The second part of your post is irrelevant because we don’t know what that formed contract entails without understanding the details.