Once you have found the car you want to purchase, you will want to put a deposit on the car. The deposit will allow you a few days to research your financing options and insurance costs for the new car. How much should the deposit be? What are the acceptable forms of payment for the deposit? There are several variables to consider when deciding the amount and form of deposit to make.
- Skill level:
- Moderately Easy
Consider the negotiated purchase price of the car. The expectation of the car dealer for the size of the deposit you would leave will be different depending upon the price. For example, a £32 to £65 deposit on a £9,750 car should be sufficient. However, on a £48,750 car, the dealer may expect a deposit of £325.
Consider the time frame imposed by the car dealer. Certain deals last for only a few days. If the negotiated purchase price will expire in two days, the deposit you need to make is not that large. That's because you are not asking the car dealer to hold on to the car for an extended period of time and thereby inconveniencing the dealer.
Ask the car dealer if a specific amount of deposit is required by the dealership. You do not want to find out that your deal fell through because of a deposit that did not meet the dealership requirements.
Make the deposit in a form acceptable to the dealership. Most dealerships will accept cash, checks and credit cards. Many people like to earn credit card rewards, and auto purchases are no exception. If you make a deposit by credit card, be aware that the dealership may have a threshold on how much of the entire transaction can be paid for with the credit card. For example, if the dealership allows only £195 of the entire purchase to be paid for with a credit card and you paid the £65 deposit with your credit card, that means you can pay only £130 of the down payment with the credit card. You will need to consider where the rest of your down payment will come from before making the deposit payment.
Tips and warnings
- Verify upfront with the dealership whether your deposit will be refundable or non-refundable. If your financing falls through or something happens that prevents you from making the purchase, you will want your deposit back.
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