Non-refundable deposits – Where do you stand?

legal updates

Relevant paperwork should be provided before payment is taken.

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Although most transactions in the motor industry include non-refundable deposits, motor traders should not rely on this being common knowledge. Not all consumers are aware they may lose their deposit should they decide not to continue with the purchase of a vehicle.

It has become more common for deposits to be taken on vehicles and for the consumer to be provided with the relevant paperwork after the fact. For most, this should not become an issue unless the contract is unwound.

The used car market has become increasingly competitive and deposits are used to secure the perfect car. Given the progression of technology, deposits can easily be taken online or over the phone without any undue delay. However, this leaves traders open to not providing the relevant paperwork or terms the consumer would need should the purchase of the vehicle not be completed.

For motor traders to fulfil their obligations for taking non-refundable deposits, the relevant paperwork should be provided before payment is taken. This means the consumer has been made aware, before the agreement, that should the contract be unwound, the deposit amount will be retained by the motor trader.

The Motor Ombudsman has made similar judgments in comparable cases where the consumer was provided with the relevant paperwork post-payment, but this was not enough to discharge the trader’s obligations when taking non-refundable deposits. In these cases, the trader was instructed to return the deposit monies in full to the consumer, despite their terms stating otherwise.

Fortunately, for Lawgistics members, our vehicle order form already includes details about non-refundable deposits. Simply access our stationery range via your HR Manager account, create the relevant form, and save it as a pdf to either email to or print out for your customer.

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Kimberly StickleyTrainee SolicitorRead More by this author

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