If you're buying a used car you may be asked to put down a deposit, but not necessarily.
There are 2 types of deposit you might be asked for: a holding deposit or a purchase deposit.
Different states have different restrictions and cooling-off periods when it comes to used car deposits.
Do I need to leave a deposit?
Both private sellers and car dealerships may ask you for a deposit when buying a used car. This is typically so that if you're not buying the car there and then, the seller can hold the car for you.
Buying from an individual seller: There is no obligation to pay a deposit or to follow through with the sale even if you have paid a deposit.
Buying through a car dealer: Car dealers are more likely to ask for a deposit to secure the sale or require you to sign a contract. Some states have regulations in place for used car dealerships that allow them to ask for a deposit, but only up to a limit.
Queensland. The dealer can charge you a non-refundable deposit that cannot exceed $100.
South Australia. The dealer can ask you to leave a deposit that's up to 10% of the purchase price.
Other states have no regulations for deposits.
Cooling-off periods
Each state will also have different rules around cooling off periods and how much of a deposit can be refunded. For example, in South Australia if a buyer backs out during the cooling off period the dealer can keep 20% of the deposit (2% of the purchase price) or $100 (whichever is cheaper). Some states do not have cooling off periods and so you will lose your deposit.
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Types of deposits for used cars
There are two types of deposits that you can be asked for when buying a used car. The holding deposit is typically used for private sellers and the purchase deposit for used car dealerships.
Holding deposit
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 this needs to be decided between you and the seller
You need to agree whether this deposit is refundable (get this in writing)
Will generally only apply for a limited time
Purchase deposit
You commit to purchasing the vehicle
It's usually non-refundable, but you should confirm this with the seller
You sign a contract that outlines all terms and conditions relating to the sale
What to do if you leave a deposit
You might be eager to lock in the car you're looking at, but take a minute to follow some key steps to make sure you're protected.
Agree on the terms. Check whether the deposit is refundable, whether the deposit is part of the purchase price and how the deposit should be paid. Have all the terms written down and signed by both parties.
Get a receipt. It's important to get a receipt for the deposit for your own records, especially if there is any disagreement down the line.
Inspect the car thoroughly. Even if the deposit is refundable, check the car thoroughly before putting down your deposit. If possible, get a mechanic to inspect it. Make note of the Vehicle Identification Number (VIN) and check if the car is under finance. You can read more about what to do in the used car buying guide.
Don't leave too large a deposit. Check the section above to see if your state has regulations for how much of a deposit you are required to leave. If there are no regulations, you don't have to leave a large deposit and risk losing the money if you're not entitled to a refund.
Can I change my mind and get my deposit back?
Each state has its own regulation in regards to "cooling-off periods", which can affect your ability to get your deposit back. A cooling-off period is a period of time after you sign a contract in which you are able to cancel it.
Here are the cooling off periods by state:
Queensland. One day cooling-off period applies to all used car sales. You must cancel in writing.
NSW. A one-day cooling-off period only applies when you are purchasing the car with finance arranged through the dealer. You must cancel in writing by 5pm the next business day after signing the contract. The dealer can charge you $250 or 2% of the cars value, whichever is less.
Victoria. Three day cooling-off period, excluding weekends and public holidays. This applies to cars and motorbikes purchased from licensed motor car traders. You lose this period if you opt for delivery during the three-day period. The dealer can keep $100 or 1% of the purchase price, whichever is greater.
Tasmania. No cooling-off period applies.
South Australia. Two-day cooling-off period. If you cancel during this period, the seller can keep $100 or 2% of the purchase price, whichever is less.
Western Australia. No cooling-off period applies.
Northern Territory. No cooling-off period applies.
ACT. Three business day cooling-off period when buying through dealer. You can cancel in writing and the seller can charge you $100 or 1% of the purchase price, whichever is greater.
Frequently asked questions about putting down a car deposit for a used car
Whether or not car deposits get refunded depends on how you're buying the car and the deposit agreement.
If you're buying through a dealer, different states have different rules on refunds for change of mind. You would need to adhere to the different states' cooling-off periods. With a private seller, you would need to establish in writing before paying the deposit if it is refundable.
If you're going ahead with the purchase, you should always check beforehand whether the deposit amount will be included in the final purchase price. For example, if you're buying a used car for $10,000, a seller might ask you to pay $500 so they can hold the car for you. Then you would pay the remaining $9,500 at the time of purchase.
Some states have regulations in place about how much a dealer can charge for a used car deposit, but others do not. Typically, a deposit of 10% of the purchase price is considered reasonable. Be cautious in handing over deposit money to a private seller as there may be less protections.
Many people don't apply for car finance until they've found the car they want to buy. That's because they then have a clearer idea of how much they need to borrow and they have details of the car if they want to secure the loan. But there's a chance then of paying the deposit and then being rejected for your car loan.
Unless you have it specified in your contract or agreement that you will buy the car 'subject to finance', you may not get your deposit back. If you're worried about getting finance, make sure you tell the seller you're waiting for finance and have the 'subject to finance' included in your agreement.
Check the cooling-off periods that vary by state. If you are still within the cooling-off period you may be able to get your deposit back.
Elizabeth Barry is an experienced journalist with over 10 years of expertise in personal finance, contributing to outlets like the ABC, Sydney Morning Herald, and 7News. She holds a Master of Arts in Creative Writing and a Bachelor of Arts in Communication from the University of Technology Sydney, and has earned multiple award nominations, including a Highly Commended recognition at the 2017 Lizzies. Elizabeth began her career at Finder in 2013, progressing through roles to become Lead Editor, where she oversaw a wide range of personal finance coverage until 2024.
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I changed my mind about selling a car privately but already received a deposit and a receipt was written up but there was no written or verbal agreement or contract made , am I able to change my mind
Finder
RichardJune 4, 2025Finder
Hey Luke,
You’ll need to work this out with the buyer and return their deposit.
jonMay 10, 2025
I put down a large deposit on a car from a used car dealership (Queensland), no contract signed or deposit receipt given. So nothing in writing.
I was planning to pay the remainder in 5 days, I didn’t think to mention this to the dealer and they also didn’t ask me when I was going to pay remainder on the day of the deposit.
(Maybe dealer assumed I’d be back next day considering the large deposit).
Anyways, I got arrested couple days after I put down deposit and held in remand centre for just over 1 month when I got bail.
Can I get my deposit back?
Finder
TimMay 12, 2025Finder
Hey Jon, thanks for the question.
This one might be a bit outside our remit. The details are going to come down to that initial agreement. Oral contracts are certainly binding, but the assumed details of oral contracts are pretty variable from state to state.
The sensible thing would probably be to start by speaking to the dealer. If they refuse to give you the money back, it might be something you need to take up with a lawyer.
Sorry I couldn’t be more helpful, but I hope you’re able to sort it out.
Good luck!
RhonMacOctober 10, 2018
Hi
My 17 yr old son has paid a $500 deposit to a dealer
Hoping on finance which is proving difficult…not allowed under 18
Parents are required to borrow for him even though he is earning good money in a permanent part time job per week.
They also have commitments of their own
If finance can’t be arranged does he lose his deposit?? And his trade-in agreed to sell as part of the deal!
Finder
JohnOctober 10, 2018Finder
Hi RhonMac,
Thank you for leaving a question.
Was an agreement signed when the $500 deposit was given? Ideally, there should be one that states whether the deposit is refundable, whether the deposit is part of the purchase price and how the deposit should be paid. Have all the terms written down and signed by both parties. This ensures clarity for the pending contract on the car. Please reach out to the dealer on what you could agree upon regarding the deposit. Hope this helps!
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I changed my mind about selling a car privately but already received a deposit and a receipt was written up but there was no written or verbal agreement or contract made , am I able to change my mind
Hey Luke,
You’ll need to work this out with the buyer and return their deposit.
I put down a large deposit on a car from a used car dealership (Queensland), no contract signed or deposit receipt given. So nothing in writing.
I was planning to pay the remainder in 5 days, I didn’t think to mention this to the dealer and they also didn’t ask me when I was going to pay remainder on the day of the deposit.
(Maybe dealer assumed I’d be back next day considering the large deposit).
Anyways, I got arrested couple days after I put down deposit and held in remand centre for just over 1 month when I got bail.
Can I get my deposit back?
Hey Jon, thanks for the question.
This one might be a bit outside our remit. The details are going to come down to that initial agreement. Oral contracts are certainly binding, but the assumed details of oral contracts are pretty variable from state to state.
The sensible thing would probably be to start by speaking to the dealer. If they refuse to give you the money back, it might be something you need to take up with a lawyer.
Sorry I couldn’t be more helpful, but I hope you’re able to sort it out.
Good luck!
Hi
My 17 yr old son has paid a $500 deposit to a dealer
Hoping on finance which is proving difficult…not allowed under 18
Parents are required to borrow for him even though he is earning good money in a permanent part time job per week.
They also have commitments of their own
If finance can’t be arranged does he lose his deposit?? And his trade-in agreed to sell as part of the deal!
Hi RhonMac,
Thank you for leaving a question.
Was an agreement signed when the $500 deposit was given? Ideally, there should be one that states whether the deposit is refundable, whether the deposit is part of the purchase price and how the deposit should be paid. Have all the terms written down and signed by both parties. This ensures clarity for the pending contract on the car. Please reach out to the dealer on what you could agree upon regarding the deposit. Hope this helps!
Cheers,
Reggie