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Putting down a deposit can help you hold a vehicle while you get the full payment or financing together. But be careful — it can also be used by some dealers to swindle you out of your money.
Car dealers or sellers can request that you put down a deposit so the vehicle isn’t sold to anyone else, but you aren’t obligated to do so. If you don’t feel comfortable leaving a deposit for a used car, you can always walk away — there will be another car if the one you want is sold.
And generally speaking, it’s not a good idea to leave a deposit for a car that you aren’t sure you want.
There are two types of deposits that you can be asked for when buying a used car: holding and purchase.
A holding deposit prevents the dealer from selling the car to another buyer and is the most common type of deposit for a used car.
A purchase deposit is most often used when the dealer doesn’t have the car you want in stock.
For new cars, a deposit is often required when buying a car from the factory. Used car dealers will sometimes require a purchase deposit when they’re trading or buying a car from another dealer.
If you decide to leave a deposit to hold your vehicle, there are a few ways you can protect yourself:
Maybe, though it depends on the car dealer. While federal and state laws give consumers automatic cooling off periods for some types of purchases, car sales aren’t among them. This means whether you can get your deposit back after signing a contract will depend on the dealer’s policy.
Be cautious any time you’re asked to leave a deposit on a used car and get everything in writing. And if you’re looking to finance a used vehicle, compare car loan providers to find one that might offer better rates and terms than the dealership.
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