You’ve spotted a car that you are interested in, gone for the test drive, applied for finance with the bank of your choice, signed the offer to purchase and have paid the deposit. What if, for some reason, you cannot proceed with the deal? Let us look at what your options are in this regard.
Why do we put a deposit down?
In simple terms, a buyer puts a deposit down on a vehicle to reduce their monthly premiums and to ultimately reduce the amount of interest they will pay on said loan throughout the duration of the finance contract. The larger the deposit, the lower the monthly premium becomes and indeed, the lower the total amount of interest paid will be.
Can you get your deposit back?
When purchasing a vehicle from a dealer, it is important for the seller to test drive and perform an inspection on the vehicle, while a roadworthy or multi-point inspection report on used vehicles is also very important to consider. Once you are happy with said vehicle, applying for finance is the next step, where you must structure a deal that suits your short and medium-term budget.
The buyer will then be required to sign an offer to purchase (OTP) which is very different from a quote. A quote simply details the specific costs associated with the purchasing of a vehicle while an OTP is a legally binding contract between two parties stating that the buyer intends on purchasing the vehicle and its associated extras from the seller. Once the OTP is signed, the buyer will then pay the predetermined deposit amount, usually into the dealership or financial institution's bank account, provide proof of insurance and will then be able to collect their vehicle.
The buyer will have to sign a delivery note when collecting their vehicle, which is a legal document stating that they are satisfied with the vehicle at the time of collection. If the buyer has paid the deposit and is yet to sign the delivery note, the deal can be reversed, and the deposit refunded. There is also a so-called ‘cooling-off period’ that is valid if the OTP or delivery note was signed at any place outside of the seller or financial institution’s property. The cooling-off period allows the deal to be reversed.
In the instance where the delivery note has been signed, it becomes difficult for the buyer to get out of the contract and have their deposit returned without proving, as per Section 56 (2) of the Consumer Protection act that there was an inherent defect with the vehicle or that that the vehicle was not fit for the purpose for which they purchased it. The right to return the vehicle is valid for up to six months after purchase and excludes wear and tear.
