Car Deposit - Complex situation, need advice

[mpkayeuk]

This is the history...

 

- Used an online credit broker to find a good deal on a new car

- Agreed with broker to go ahead with finance

- Ordered car from dealer (referred to me by credit broker) and placed £500 deposit (debit card) over phone in July

- Had finance agreed (a Personal Contract Purchase/Balloon arrangement) by finance company

- Dealer asked for remainder of deposit £2500 (which I paid over the phone by debit card). Later same day I visited dealer in person and signed order form which states deposit is non refundable. States customer balance is £0 with signficant amount due from finance company

- Informed by dealer car would arrive mid-late October (order form says Oct/Nov)

- Car arrived at dealer late mid-late November

- Dealer contacts finance company who then says the agreement has lapsed and they need to re-approve

- Finance company did not approve finance second time around

 

Without the finance I am unable to purchase the vehicle. Basically, I have placed a significant deposit and now have no way to purchase the car. Dealer is obviously saying I can't have my deposit back. I have since learned that it is unusual for a dealer to ask for more than the initial £500 deposit. I was fine with this at the time because I felt I had a good relationship with them and, if I could fund it, I would still purchase the car.

 

My question is, is this a cancelable prospective debtor-creditor-supplier agreement regulated by CCA? Can I get my deposit back in any way? The only thing I have signed is the purchase contract/order form for the car, haven't signed anything with regard to credit although it is clear from the contract that this was to be the vehicle by which the balance would be funded.

 

Help much appreciated.

[Conniff]

The reason for a deposit is to hold the car even if another customer comes in and wishes to purchase offering cash there and then.

 

If they can prove without any doubt that they could have sold the car and have lost money while it was being held under your deposit then probably a reduced refund, but, they have not lost value in the car and £3,000 is one hell of a whack for a deposit.

 

I take it this is a local dealer?

 

What time limit were you given to take up the finance and is this written anywhere in the dealer paperwork or the finance companies, or was it not mentioned by either party?

 

If the answer is 'not mentioned', then write using recorded delivery asking for the return of your deposit.

If they say no, send them another demand only this time in bold, print across the top of the letter, "Letter Before Action". You should also mention that they will also be liable for your court fees as well.

 

If the answer is still no or they do not respond, then you must issue a court summons.

 

There will be no point in writing any letters if you are not prepared to go to court to reclaim your deposit.

Edited January 5, 2009 by Conniff

[mpkayeuk]

I have neither seen nor signed anything at all with the finance company, although it is clear on the order form that the balance was due from the finance company. The dealer has also admitted in writing separately that this was not a cash sale. I do not recall if the dealer or the finance co. mentioned anything about offers expiring (until informed by the finance co. directly that this is the case after expiry), there is certainly nothing written to that effect anywhere. Verbal quote from dealer, "They are messing around". At which point they attempted to get a quote through their own dealer finance, although never followed this through.

 

I have already issued court papers as the dealer is unwilling to negotiate. They have issued a counter claim for the balance of the amount due on the vehicle despite the order form stating very clearly that the balance due from the customer is £0. I am prepared to go to court, but the situation seems a little daft as the total amount of the counter claim takes it above small claims and into multi-track, which I think means I need formal legal representation (correct me if I'm wrong). So this could end up costing me or them a bomb. The counter claim also accuses me of changing my mind. Something I clearly did not do as I submitted the second finance app to the finance company when requested. I did ask the finance company what would happen to my deposit if I did change my mind (how this got back to the dealer I don't know), but it was clearly a question (I can prove it, I have the emails still) and NOT a statement, it was a just a reflection of my thoughts due to the situation at the time.

 

The dealer isn't that local, they are about 20 or so miles away from me.

Edited January 5, 2009 by mpkayeuk

[Conniff]

Something tells me this may get withdrawn at the last moment. I have never seen any regulations that state 'once a deposit is paid, the customer is then obliged to make the purchase', so I can't think what they are going to be asking the court for.

 

You don't 'have' to have legal representation for anything, you can be a litigant in person. Even in a murder, though you get a lawyer, you can represent yourself if you want.

[mpkayeuk]

The only grey area is that the contract does state that I agree to pay the balance. But then again, it also states that the balance is £0 (with remainder due from finance). I wonder if the finance falling through makes the contract unenforceable (including my deposit) because of this. Is that possible?

 

And anyway, why would they do that because they have had to pay court fees to file the counter claim! Surely it makes things worse for them :o

 

In the defence (which is littered with spelling mistakes) they also lay down some sob story about possibly not selling the car at all in the current climate and that they've never ordered one of such a high spec. It made me cringe!

[postggj]

just thinking out of the box

 

you only have the dealers word that they placed an order for the car

you need to find out where the dealer was getting the car from

might mean a sar on the dealer

keep that on the qt for the moment

 

wait for more comments

[Conniff]

The finance being granted gave you false hope and is the reason you paid the remainder of the deposit. To be later refused credit after having been granted it is not your fault.

 

The reason the finance was declined was because it ran out of time. Why did it run out of time? because the dealer was a month late delivering the car. He said October and delivered in November, that's hardly your fault.

He has brought this on himself.

 

Is the delivery date on his paperwork?

[postggj]

when i got my car through a broker, i paid just 200 quid deposit. non refundable

i accept that as the dealer has to get the car, but 3 grand

very suspect

 

did you see the car which was delievered

[Conniff]

when i got my car through a broker, i paid just 200 quid deposit. non refundable

i accept that as the dealer has to get the car, but 3 grand

very suspect

 

did you see the car which was delievered

 

And have a chance to drive/inspect it?

[mpkayeuk]

Nope, it was brand new factory order. I haven't made any attempt to go and see the vehicle as there's no point. There is no way I can buy it without finance! What I could do is, as the response date on the court forms nears, go up to the dealership and request inspection. That would at least bring out if they've sold it... not sure if that would be a good thing or not to be honest.

 

What I really need to know is what my legal situation is with regard to the deposit and the counter claim. I think the counter claim has zero chance of succeeding, but can I get the (excessive) deposit back?

[raydetinu]

Yes you will get your deposit back either before or subsequent to court action, no judge will let them get away with that, without proving they are out of pocket; Write to them askin for a detailed breakdown of their expenese and reasons why thye think they are entitled to keep the deposit; other than the unfair terms of their contract.

[aj84]

This probably does not help at all but with a recently purchase of a car, a deposit of £2500 was requested

I said not a chance as I did not have that sort of money - secondly the same brand dealership elsewhere (Audi) were only requesting a £100 deposit for holding fee

They later reduced to £500 and as the car for the spec/mileage/age could not be found anywhere in the UK (including private sale) for the price, I went ahead.

 

Now they key thing they said (and is stated on paper) is that the deposit WOULD be refunded if the finance did not go through

I knew it would go through and today I was told it did however, if it did not, be it now or in 3 months time, the deposit would have been refunded.

 

Going back... I looked at some Volvo paperwork from my Volvo days and they also had the same terms, pull out because you dont want the car, they keep deposit but if the finance does not go through, you will get it back - afterall, you can't predict how it would have gone and in that time, the car could have been sold to someone else.

 

I highly doubt you will have problems and I am suprised the dealership did not try harder... I know with my mums old car the initial finance with honda finance did not go through but did with Blackhorse at the same rate but the fact is, they did try - albeit my mums account back then probably got hit twice with a credit search!

[mpkayeuk]

Right, an update on this one. Looks like it could get messy. Dealer has been last minute or late with documentation in the court process at every step. First he filed his defence and counterclaim 1 day late, unfortunately I hadn't been able to apply for judgement before I realised this - grrrrr. Secondly, he filed his allocation questionnaire late. They also made no attempt to communicate after an initial offer to settle at £2000 was rejected by me. I mentioned this in the AQ.

 

Way before he needed to file either, he has sought a letter from the broker to say that the broker did not refer me to the dealer, but that I had found the dealer first. This is not strictly true. I was aware of the dealer prior to approaching the broker, but it turns out that the broker would've used the same dealer I had found to supply the vehicle anyway! Not sure if this has any grounds in my case anyway.

 

Anyway, the main update... the dealer is claiming he has now sold the vehicle on (no proof sent with allocation questionnaire). He is also claiming that he has made a loss that amounts to more than my deposit!! He is charging storage fees, etc, etc. Basically, the dealer is now saying I owe him £5000 (of which I have already paid £3000 in the form of a deposit). If he wins I am likely to need another £2000.

 

Where do I stand with this now? I am waiting for the case to be allocated at the moment, but want to be prepared. What is stopping the dealer selling the car to a friend at a huge loss and then claiming the difference from me? All because the finance company refused to give me finance after offering it me!

[mpkayeuk]

Actually, I've just noticed that they are claiming it has cost them £50 a day to stock the car! That is clearly bloody ridiculous. How will a judge view this? And how does it work. Do they either win the entire amount or nothing? At least I have solid proof of what I paid over to them in a deposit. They are yet to show any proof for any of their claim.

[Prolix]

As a general rule deposits are non-refundable and are designed to cover the losses of the dealer should the contract fall through. Therefore he is definitely entitled to something.

 

That said what he is wanting is way steep. Losses should be actual losses and there is no provision in UK law for punitive damages in these types of cases. So, he would have to show that he is definitely owed this money. Merely selling the car for a significantly lower amount does not amount to a right to claim this difference from you. Did he mitigate his losses? Could he have sold it at the price you were paying? Could he have found another customer? Assuming the car was fairly standard then it would be reasonable for him to be able to find another buyer. These are questions that the Judge will be asking.

 

Don't worry about the balance of the payment for the car. The deposit is there to cover this situation anyway. If I were you I'd write to him and make him an offer to settle. That way you will look like the reasonable one in court. Offer him £250.

[mpkayeuk]

Hi Prolix, have you read the entire thread? The stuff about credit, etc?

[Prolix]

Yep, I read the thread, not sure what you are getting at?

[mpkayeuk]

Well, primarily the fact that the vehicle was ordered on the back of a finance offer that was then withdrawn by the finance company :o

[Prolix]

If you mean can the trader hold you for the balance? No. That's what a deposit is for.

 

Can you claim the deposit back from the finance company? Possibly. Providing you were unaware that the offer expired

[mpkayeuk]

But what about debtor-creditor-supplier?