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Putting down a deposit for a used car

Looking to save by purchasing a used car? Here's everything you need to know about deposits.

If you're in the hunt for a used car or you've already found the vehicle you want to buy, 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, if 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 you need to leave a deposit?

Sellers can request that you put down a deposit so the vehicle isn't sold to anyone else – whether you oblige or not is up to you. 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 needs to be decided between you and the seller
  • You need to agree whether this deposit is refundable (get this in writing)
  • Applies for a limited time

Purchase deposit

  • You commit to purchasing the vehicle
  • It's usually non-refundable, but 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

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. Getting a receipt for the deposit is an important record to have, especially if the deal goes sour.
  • 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 it's 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.

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Found your car? Calculator your monthly repayments with the below loans

Rates last updated June 23rd, 2018
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Monthly Service Fee Application Fee Product Description Monthly Repayment
IMB Secured Personal Loan
6.89% (fixed)
1 to 5 years
All approved applicants can access this competitive rate and use the loan to finance a range of purposes. Loan amounts up to $60,000 available.
Stratton Finance New Car Loan
From 5.29% (fixed)
1 to 7 years
Apply for up to $100,000 and have up to 7 year(s) to repay. You can use cash or trade in a vehicle to use as a deposit.
Beyond Bank Low Rate Car Loan
From 5.69% (fixed)
1 to 7 years
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.
NRMA Used Car Loan
From 6.99% (fixed)
1 to 7 years
Finance a used car with NRMA and benefit from a fixed rate term and no monthly fees. Pre-approval available within 5 business hours.
Heritage Bank Car Loan
From 6.99% (fixed)
1 to 7 years
Apply for up to $100,000 to finance a new or used car at a competitive fixed rate.
Sydney CU Special Variable Car Loan
5.95% (variable)
1 to 7 years
Benefit from a flexible, variable rate to finance a car up to 3 years old with SCU.
Heritage Bank Low Rate Secured Loan
From 5.14% (variable)
1 to 10 years
Have a Heritage Bank term deposit? Borrow up to the value of your deposit when you use it as security for this loan.

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Important Information*
IMB New Car Loan

Borrow up to $75,000 for a new car up to two years old. Competitive 5.99% p.a. rate available to all approved applicants.

Stratton Finance New Car Loan

Apply for up to $100,000 and have up to 7 year(s) to repay. You can use cash or trade in a vehicle to use as a deposit.

NRMA New Car Loan

Purchase a new car with an NRMA Car Loan with a fixed rate term and no monthly fees. Pre-approval available within 5 business hours.

Loans.com.au - New Car Loan

This car loan is for new cars and offers a low fixed rate and no ongoing fees.

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