Is deposit on vehicle a binding contract?

q_v2.gif I put a $1,000 deposit on a new Dodge 2009 Challenger. The sales manager told me they were a limited-production car. He said he already sold eight out of the nine he expected to get all year, so I'd better hurry ... He said $4,000 over sticker price was a great deal, and a lot of other baloney. I'm 55, and this was the first new car I have ever bought. Three months later, I was in Chicago and the dealer up there seemed to have plenty of Challengers, and he'd sell me one for list price. I tried to cancel the first car but the dealer told me he won't refund my money because he would have to sell the car as a used car if I don't take it. Is it time for Judge Judy? What is the law pertaining to new-car deposits?

a_v2.gifYou seem to be combining two different scenarios here.

Scenario one would be simply putting down a deposit. Assuming you got a receipt in writing, you should be able to tell if it's nonrefundable. You did get a receipt in writing, didn't you?

If it's not refundable, you might be out the $1,000. If you can get the second car for $4,000 less from another dealer, you're still better off than if you bought the first car. I can't think of any way the first dealer can compel you to take delivery just because you put down a deposit. That's the whole idea of a deposit; the dealership knows they have a serious customer because you risk losing the deposit if you cancel the deal.

Scenario two would be that you made a down payment, not a deposit; signed a finance contract, took out a loan and put the car in your name. It sounds pretty unlikely that you could sign a contract without knowing it and without taking delivery, so I'm assuming you only put down a deposit.

The dealership could be trying to muddy the water by claiming they can't resell the vehicle as a new car if you don't take it. That's baloney unless the title is in your name. Once a new car's title is transferred to a customer's name, it can't be resold as a new car.

Speaking of baloney, nobody should ever pay above sticker price for any car. In the auto industry, that's called "gouging." It happens sometimes, but only when a car is a really hot new brand and when it's not available in all markets during the rollout. It doesn't usually last long, so it pays to wait a few months. Nowadays, it's rare for anybody to pay sticker price, let alone more than sticker price.

An additional slice of baloney: You saw with your own eyes that a big Dodge dealership in a big market is going to get more Dodge Challengers to sell than a little dealership. But that doesn't make it "limited production."

Unfortunately, it sounds like this dealership saw you coming, and it was more interested in a quick sale than a long-term relationship.



Show Bankrate's community sharing policy
          Connect with us


Tara Baukus Mello

543K more Toyota cars recalled for air bags

The auto giant has announced another air bag recall in order to meet safety standards.  ... Read more

Connect with us