Car deposits: What are my refund rights?

Last updated on March 6th, 2025

No one wants to see their car deposit go down the gurgler. But if you change your mind or find a better deal before the sale goes through, do you have the right to a refund?

After all, the deposit was accepted in good faith as your commitment to buying the vehicle. Can the dealer just ride off into the sunset with your money?

The good news is you have automatic protection under Australian Consumer Law (ACL), should the dealer not hold up their end of the bargain. The vehicle, for example, must be of acceptable quality, have spare parts and repair facilities available and meet securities guarantees.

 

 

A cooling-off period is a defined length of time, usually no more than three days, during which if you decide you no longer want to go ahead with the purchase, your deposit should be repaid. You must give written notice before the cooling-off period expires. As this varies from state to state, it is important to check local regulations to see whether car deposits are refundable. They do not apply to cars brought from a private seller.

Check the cooling-off provisions

A cooling-off period is a defined length of time, usually no more than three days, during which if you decide you no longer want to go ahead with the purchase, your deposit should be repaid. You must give written notice before the cooling-off period expires. As this varies from state to state, it is important to check local regulations to see whether car deposits are refundable. They do not apply to cars brought from a private seller.

In South Australia, for example, it does not apply to new cars, and consumers only have two clear business days – Saturday counts as a business day for car sales – to rescind their sales contract. The dealer has until the end of the next clear business day to refund the deposit but may keep either two percent of the contract price or $100, whatever is less.

Victoria has a three-day cooling off period, excluding weekends and public holidays, for cars and motorbikes bought from licensed dealers. If you cancel within the cooling-off period for a new car, the dealer may keep $400 or two percent of the purchase price (whatever is greater). For a used car, it’s $100 or one percent of the purchase price.

Tasmania does not have a cooling-off period and advises consumers to pay the minimum amount possible as a deposit and check if it is refundable. There is no cooling-off period in Western Australia, either. If you need to withdraw after you have signed the contract, the dealer may ask for ‘pre-estimated damages’ of no more than five percent of the total price.

 

 

How do I protect myself?

The most important step you can take is to understand your rights before you make a deposit. Ensure the appropriate cooling-off period is written into your contract and ask them to adjust accordingly if it is not.

Don’t pay more than you should as a deposit, either. There are regulations about how much dealers can ask for a used-car deposit, for example, with 10 percent typically regarded as fair. If you are buying from a private seller, negotiate a smaller deposit as they are not obliged to give a deposit refund.

If the car sale is subject to finance, make sure that is specified in your contract. Otherwise, if finance falls through, so might your deposit. Better still, ensure you have financing sorted - and don’t sign a thing - before you put down a deposit.

 

 

What if the dealer won’t refund my deposit?

If your circumstances change – for example, an unexpected bill or illness arrives just after you put down the deposit – talk to the dealer and explain the situation. They might be accommodating even if your request falls outside the cooling-off period, as they don’t want to appear heartless or receive a bad review online. The amount of money involved is often not substantial to them, particularly if you can’t pay the rest.

Another instance where you might want your deposit returned is when the car had not been delivered within an agreed time frame. Make sure this is written into your contract before you make a deposit. You may be prepared to wait longer if the delay is not substantial but you should ensure you have the option for a deposit refund.

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