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Putting down a deposit for a used car
Looking to save by purchasing a used car? Here's everything you need to know about deposits.
If you’re in the hunt for a used car or you’ve already found the vehicle you want to buy, you may be wondering if you need to leave a deposit. Both private sellers and used car dealerships may ask for a deposit, so it’s important to know how much you’re required to put down, if you’re entitled to a refund, or if you need to leave a deposit at all. Read through the guide to see where you stand before you make your purchase.
Do you need to leave a deposit?
Sellers can request that you put down a deposit so the vehicle isn’t sold to anyone else – whether you oblige or not is up to you. On the other hand, a used car dealer is more likely to ask you for a deposit to secure the sale, or require you to sign a contract.
Types of deposits for used cars
There are two types of deposits that you can be asked for when buying a used car:
- A holding deposit essentially “holds” the vehicle for you but you’re in no way obliged to follow-through with the purchase
- It may go towards the purchase price but needs to be decided between you and the seller
- You need to agree whether this deposit is refundable (get this in writing)
- Applies for a limited time
- You commit to purchasing the vehicle
- It’s usually non-refundable and goes towards the purchase price, but confirm this with the seller
- You sign a contract that outlines all terms and conditions relating to the sale
- COE bidding for all categories (except category D) also requires a mandatory $10,000 deposit
What to do if you leave a deposit
If you decide to leave a deposit to hold your vehicle, there are a few ways you can protect yourself:
- Agree on the terms of the deposit. Check whether the deposit is refundable, whether the deposit is part of the purchase price and how the deposit should be paid. Regardless if you’re buying from a car dealer or directly from the car owner, make sure you have all the terms written down and signed by both parties.
- Get a receipt. Getting a receipt for the deposit is an important record to have, especially if the deal goes sour or if you purchased a lemon.
- Inspect the car thoroughly. Even if you’ve agreed that the deposit is refundable, checking the car before putting down your deposit can save yourself hassle down the track. Make note of the engine number, chassis number and number plate, and if possible, have the car inspected by a mechanic. Also, check if the car is still under finance. You can read more about what to do in the used car buying guide.
- Don’t leave too large a deposit. The Singapore government do not impose a fixed amount of deposit for car purchase (except for commercial hire purchase), so you don’t have to leave too a large deposit. If you leave a big deposit and change your mind, it’s a larger amount of money you’ll stand to lose if you aren’t entitled to a full refund.
Find out which lenders can help you finance your used car purchase
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