Finder makes money from featured partners, but editorial opinions are our own.

Putting down a deposit for a used car

Looking to save by using a deposit for a used car? See your options and compare used car loans now.

OurMoneyMarket Used Car Loan - No Vehicle Age Limit logo image


6.57 % p.a.

fixed rate


7.19 % p.a.

comparison rate

Rate dependent on risk profile


If you're looking to buy a used vehicle, you may be wondering if you need to leave a deposit.

Both private sellers and used car dealerships may ask for a deposit, so it's important to know how much you're required to put down, whether you're entitled to a refund, or if you need to leave a deposit at all.

Read through the guide to see where you stand before you make your purchase.

Do I need to leave a deposit?

Sellers can request that you put down a deposit so the vehicle isn't sold to anyone else – but you are not obliged to do so. On the other hand, a used car dealer is more likely to ask you 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.

  • Queensland. The dealer can charge you a 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.

Types of deposits for used cars

There are two types of deposits that you can be asked for when buying a used car:

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

Finder survey: Have people ever taken out a car loan?

Source: Finder survey by Pure Profile of 1113 Australians, December 2023

What to do if you leave a deposit

If you decide to leave a deposit to hold your vehicle, there are a few ways you can protect yourself:

  • Agree on the terms of the deposit. 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 you've agreed that the deposit is refundable, checking the car before putting down your deposit can save yourself hassle down the track. Make note of the Vehicle Identification Number (VIN), and if possible, have the car inspected by a mechanic. Also, 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 your state has no regulations set, you don't have to leave a large deposit. If you leave a big deposit and change your mind, it's a larger amount of money you'll stand to lose if you aren't entitled to a full refund.

Can I get my deposit back?

If you've signed a car loan contract or handed over a deposit, you may still change your mind about the vehicle. 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. A cooling-off-period of one day 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 under a credit contract, that is, using finance arranged with the dealer. You must cancel in writing and the dealer can charge you $250 or 2% of the cars value, whichever is less.
  • Victoria. A cooling-off period of three business days, excluding weekends and public holidays, 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. You're entitled to a two-day cooling-off period in SA. 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. After you've signed the purchase agreement you're entitled to a cooling-off period of three days. If you cancel during this time (must be cancelled in writing) the seller can charge you $100 or 1% of the purchase price, whichever is greater.

Picture: Shutterstock

More guides on Finder

Ask a Question

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our 1. Terms Of Service and 6. Finder Group Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

2 Responses

    Default Gravatar
    RhonMacOctober 10, 2018

    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!

      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!


Go to site