Don’t hand over new car deposits until you’re ready, says industry watchdog

The motor industry ombudsman is urging car buyers to make sure they understand what they’re signing-up before putting down a deposit on a new car. 

The new ‘24’ vehicle registration plate arrives on 1 March, at what is typically one of the busiest times for car retailers as buyers want to get in on the excitement of having the latest plate.

In the rush to join the new number plate party, many buyers trip up by failing to prepare properly for their new purchase. At Auto Express we see the results of that in our inbox every week, as disappointed car buyers relate tales of cars that don’t match the specification ordered, while other buyers fail to fully understand the financial commitments laid-out in the contract.

That’s why, before handing over a deposit, the motor industry ombudsman is urging buyers to make sure they examine the terms and conditions of any car finance deals they’re signing-up to carefully, before handing over their deposits. 

As the organisation charged with clearing up disagreements between aggrieved car buyers and retailers when things go wrong, the ombudsman is well-placed to provide pointers for making sure your purchase runs smoothly. Aside from the obvious requirement to consider whether your potential purchase passes an affordability test - which means determining whether finance payments, insurance, road tax and maintenance will be within budget - the ombudsman points to the importance of having any questions answered in writing before entering into a contract and paying a deposit.

“As with any purchase of a product or service, and as the specifics of car deposit agreements may vary, it is essential to take the time to read any associated small print thoroughly to ensure that all terms and conditions are fully understood. If you are not clear on any of the wording, or its implications, put any questions to the sales representative in writing so that you have a record of any responses and correspondence between you and the business,” it says.

While it’s not always the case, most deposits for car purchases are non-refundable, and a deposit implies that you’ve a contract with a seller. So if you put money down on a new car and subsequently fail to qualify for a hire purchase or Personal Contract Purchase (PCP), in all likelihood your deposit will be lost as you’ll breach the contract. 

The ombudsman has also pointed out a critical difference in consumer rights when you purchase in person from a showroom, compared to buying a car online or over the telephone. Doing the latter - crucially without ever physically visiting retail premises at any point during the transaction - is known as a ‘distance sale’ in consumer law. 

This gives buyers the right to a 14-day cooling off period in which your deposit must be returned if you decide to cancel, which you are legally allowed to do without reason or explanation. Similar rights do not exist when you make a purchase in person at a dealership.

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