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How to Responsibly Use a Deposit When Financing a Car

While many people go into the car buying experience expecting to find the exact car that they want, reality rarely works out so nicely. Even when searching for a new car, it is common to be stuck choosing whatever happens to be available. Many dealerships and manufacturers only offer leasing or financing incentives when you choose a car that they currently have siting on their lot. This can mean compromising on features, color, or even model.

The difficulty and uncertainty involved in this process can make it tempting to jump on the first car that checks most of your boxes, but it's usually a good idea to wait before signing on the dotted line. Deposits are usually the best option if you want a dealership to hold a car for you, but there are a few tips that you should follow in order to use this tool wisely.

Ask to See the Terms in Writing

Most people assume that they can throw a deposit down on a car at any dealership, but not all dealerships accept deposits, and the terms of those deposits will vary from lot to lot. Before placing yours, be sure to ask to see the terms in writing. However, his isn't a situation where you should just skim the legalese and then hand over your money. Carefully read the dealership's rules and restrictions so that you understand what your deposit is actually buying you and what it will take for you to get it back.

Don't Place Deposits Unless You're Serious

Placing a deposit can be a big step in the purchasing process, especially if the dealership you are working with only offers non-refundable deposits or deposits that are conditionally refundable. Placing a deposit on a car should mean that you are ready to buy, but need to take some additional steps such as arranging for a pre-purchase inspection or acquiring financing from a lender other than the dealership.

Consider Using a Credit Card for Your Deposit

It goes without saying, but never place a deposit that you cannot afford. Assuming you have the cash available, however, it's worth using a credit card rather than a debit card or cash to place your deposit. This offers you some additional protection and also allows you to make use of reward points on your deposit.

Understand that Dealerships May Not Hold the Car

Finally, it's important to understand that deposits do not actually guarantee that a dealership will hold a car for you. Some dealerships may offer more concrete terms, but others will simply consider a deposit to be a guarantee of first-right-of-refusal or similar. Dealerships will return your deposit in the event that they sell the car, but this still leaves you without a car and potentially without your deposit for some time if you used a debit card to pay for it.