In some situations, car dealerships or sellers ask consumers to put down a security deposit to purchase a car. This often happens when purchasing a used car, typically to hold a vehicle for a certain amount of time after you have negotiated a price. There may be other situations when a dealer asks for a deposit, such as when a dealer does a trade with another dealership or when a car is special ordered from a factory.
When putting down a security deposit on a car, there are some potential pitfalls, particularly if you are buying a used car. That is why you should think carefully before agreeing to a deposit—and watch out for any possible scams or places where an unsavory character could take advantage of your good faith. Read on to learn how you can protect yourself.
The first thing to remember is that if you leave a security deposit with someone selling a car—whether it is at a car dealership or with an individual selling a car—you are risking losing that money. There are any number of unscrupulous people out there looking to make a quick buck off of people who may not realize that others are scamming them.
For example, if you find the car of your dreams, you may be pressured into putting down a security deposit to hold the car until you can take out an auto loan to fully pay for it. The only problem is that you haven’t reviewed the car’s history or had it inspected. It might actually be a lemon, have been in a number of accidents, or be written off due to some type of damage. The person who took your deposit will still have your money, and you’ll be stuck either going through with the deal for a bad car or walking away without your deposit.
Another possibility is that the car is actually stolen and you’ve put down a security deposit on the car of someone else’s dreams! This is why you should be cautious when asked to put down a deposit to hold a car. Unless you know the car’s history and that you will actually be able to possess the car, it could be a scam.
If you do decide to put down a security deposit, negotiate it down to as low as possible. That way, if you are burned, it won’t be as big of a loss.
There are ways that you can avoid schemes. First, ask for the vehicle’s VIN number, and run it through an online car history report website before putting down a security deposit. With the number of websites offering vehicle histories, this is a relatively simple step that can save you a major headache.
Second, ask for a contract regarding the security deposit. This document should clearly explain the terms of the deposit, including the fact that it is fully refundable. If a dealership hands you a long document filled with big words, take your time and read through it carefully. Ask to strike out certain words, phrases, or provisions that do not favor you, like anything stating that the deposit amount is not refundable. Make sure that the dealer initials any changes that you make to the contract.
Third, after negotiating the security deposit amount down to as low as possible, ask to pay for the deposit with a credit card. If you pay cash, write a check, or give the seller a money order, your money is gone if it turns out to be a scam. But if things go sideways and you used a credit card, you always have the option to dispute the charge.
How to Get Help
If you believe that a person tried to scam you or that you were a victim of a scam related to the purchase of a car, there are places that you can turn to for help. If an individual scammed you, he or she may have committed a crime, depending on the circumstances and your state’s law. You may consider filing a police report, particularly if you suspect that the car was stolen.
If a dealership is refusing to return a security deposit to you, then you can contact your state’s consumer protection agency, which may be run through your state’s Office of the Attorney General. You can also file a complaint with the Better Business Bureau. Finally, an attorney who specializes in consumer protection law could advise you on other courses of action, which may include taking your case public. In the era of social media, negative reviews on Facebook and through other platforms might be enough to start a conversation with the dealership about getting your deposit back.
Buying a car can be incredibly stressful—especially if you are being pressured to do something that you are unsure about, like putting down a large deposit. Going into the transaction with an idea of how to handle it can help you better deal with the situation and protect yourself from getting scammed.