What Car? Q and A - Perils of putting down a deposit

Q: I paid a private seller £500 deposit for a car I wanted to buy, but a few days later I changed my mind. I asked him for the £500 back, but was told that the deposit was non-refundable. What can I do - can I demand the money back?
Andrew Leonard

A: By refusing to complete the sale you have agreed, you are technically in breach of contract and so forfeit your deposit. The exception to this is if you pay a deposit and later discover the goods are not as described, faulty, stolen or with outstanding finance.

Although you might not be able to contest the fact you are in breach of contract, you might be able to argue the amount of money you forfeit. On cars with a higher value, say £10,000 and over, a £500 deposit is equal to 5% of the total price and could be seen as reasonable compensation for a lost sale. However, if the total price of the car is only £3000, a deposit of £500 is rather steep and goes beyond reasonable compensation.

You should first approach the seller to discuss an amicable solution. If all else fails and you feel you're being treated unfairly, you could pursue a claim through the small claims court. Even if you lose, you will not asked to pay any costs, unless you have behaved unreasonably during the proceedings.

When buying a car privately it’s important to make sure you are happy with the vehicle, because as soon as you agree the sale you enter into a binding contract.

You don’t have to have anything in writing or even shake hands to formalise a deal.

Before you agree anything, or hand over any money, do your homework – and make sure it’s the right car for you. If a seller asks for a deposit that seems too high compared to the total cost of the car, ask why. Only be prepared to pay a reasonable amount, in case there is a later problem – which is out of your control – and you struggle to get your money back.