Car sale deposits: how much, when, and what if the buyer walks
Key takeaways
- Agree the deposit terms in writing before any money moves: the amount, the deadline for the balance, and when the deposit is refunded.
- Check the deposit has landed in your own banking app. A screenshot or an email is not money.
- Cooling-off rules generally don't cover private sales, so a change-of-mind refund comes down to what you and the buyer agreed.
- Keep the keys, the papers and the car in your name until the full balance has cleared in your account.
A car sale deposit is a part payment that holds your car for one buyer while something still has to happen, usually an inspection or the buyer arranging the rest of the money. There’s no standard amount, and whether you keep it or hand it back if the buyer walks away depends mostly on what you both agreed when it was paid. So write the terms down before any money moves, and keep the car and keys until the balance has cleared.
What does a deposit actually do in a car sale?
A deposit takes the car off the market for one buyer. In return, the buyer shows they’re serious by putting money down before the sale is finished. RACQ notes that a deposit is usually considered evidence of a contract, so treat it as a real agreement rather than a friendly gesture.
What a deposit isn’t matters just as much:
- It isn’t the full price. It’s part of the price, and it doesn’t mean the rest will follow. Until the balance has cleared, the deal can still fall over.
- It isn’t a reason to hand over the keys, the rego papers or a signed transfer. The NSW Government’s advice is not to sign anything that transfers ownership until you’ve been paid, and it’s sound advice wherever you live.
- It isn’t a test-drive bond. A buyer who still wants a drive before deciding hasn’t agreed to buy yet. Take the deposit once you’ve agreed a price.
How much deposit should you ask a private buyer for?
There’s no set amount. RACQ points out that deposit amounts aren’t usually fixed and advises buyers to pay as little as they can, so expect a careful buyer to push the figure down.
A sensible way to land on a number:
- Make it big enough that walking away costs the buyer something.
- Make it small enough that a genuine buyer doesn’t baulk.
- Think about what a no-show would really cost you: another weekend of ads, calls and inspections.
- Take it by bank transfer or cash, with a receipt either way.
The amount matters less than the terms attached to it. A modest deposit with clear written conditions protects you better than a large one agreed on a handshake.
What should the deposit agreement say?
Put it in writing before any money moves. A text or email that the buyer replies “agreed” to is far better than nothing. RACQ advises buyers to get a private-sale deposit agreement in writing and to make it refundable if their finance is declined or the inspection isn’t satisfactory. A well-prepared buyer will ask for those conditions, so decide in advance which ones you’ll accept.
The agreement should cover:
- Both names, phone numbers and addresses
- The car: make, model, year, rego and VIN
- The agreed sale price and the deposit amount
- How and when the deposit was paid
- The deadline for the balance, and how it will be paid
- When the deposit is refunded, such as an inspection finding a fault you didn’t disclose, or finance being declined if you’ve agreed to that
- When it isn’t refunded, such as the buyer changing their mind or missing the deadline
- That the car, keys and papers stay with you until the balance has cleared
A deposit receipt you can copy
Change the details in square brackets to match what you and the buyer actually agreed. Print two copies for both of you to sign, or email it and ask the buyer to reply to confirm. It’s a plain-English starting point, not legal advice.
Deposit receipt
I, [seller’s full name] of [address], received a deposit of $[amount] from [buyer’s full name] of [address] on [date], paid by [bank transfer or cash].
The deposit is for a [year, make, model], registration [rego], VIN [VIN], at an agreed price of $[price]. The balance of $[balance] is to be paid by bank transfer by [time and date].
The deposit will be refunded in full if [the buyer’s inspection finds a fault the seller did not disclose]. It will not be refunded if the buyer decides not to go ahead for any other reason, or does not pay the balance by the date above.
The car, keys and registration papers stay with the seller until the full balance has cleared in the seller’s account.
Seller’s signature and date. Buyer’s signature and date.
When the balance clears, a full receipt replaces this one. Our guide to what to include in a bill of sale lists the fields for that.
In what order should the deposit, inspection and balance happen?
NRMA’s tips for private sellers set out the order. If the buyer wants an inspection, agree on a deposit, have the inspection done, and hand over the keys once you can see the balance in your account. Each step protects you from a different risk.
| Step | What you do | What not to do |
|---|---|---|
| 1. Price agreed | Write the terms down and send them to the buyer | Take the ad down |
| 2. Deposit paid | Find it in your banking app, then take the ad down | Hand over keys or papers |
| 3. Inspection | Be there, or have someone you trust there | Let the buyer drive off with the car |
| 4. Balance paid | Wait until the full amount has cleared in your account | Sign anything on the strength of a screenshot |
| 5. Handover | Give the buyer a receipt, do your state’s transfer paperwork, hand over the keys | Leave your toll tag or personal data in the car |
Here’s how it looks with made-up figures. You agree to sell for $30,000 on a Saturday. The buyer pays a $500 deposit by bank transfer that afternoon. You both confirm an email setting the balance deadline at 5pm Wednesday, with the deposit refundable only if their mechanic finds a fault you didn’t mention. Monday’s inspection turns up nothing new. On Tuesday the buyer sends the $29,500 balance, and you hand over the keys once it has cleared.
The buyer paid a deposit and went quiet: what now?
First, make sure there really is a deposit. Open your own banking app and find the payment. A screenshot, an emailed “confirmation” or a promise that it’s on the way doesn’t count.
If the money is there and the buyer has stopped answering:
- Message them in writing, restating the price, the deadline and what your terms say happens if they miss it.
- Give them a short, specific final date, such as close of business the next day.
- Keep copies of every message and the payment record.
- If the final date passes, tell them in writing that the deal has lapsed and the car is going back on the market.
- Deal with the deposit as your written terms say.
In the example above, if 5pm Wednesday passes with no balance and no reply, you’d send that message, wait out your final date, then relist. If your terms say the deposit is kept when the buyer doesn’t complete, you have something clear to point to. If you agreed nothing, the position is far less clear, and a refund may cost you less than a long argument.
Either way, don’t spend the deposit until the deal has completed or clearly lapsed. If the buyer resurfaces with a genuine reason, having the money untouched keeps your options open.
The buyer changed their mind: do you have to refund the deposit?
Not automatically. The ACCC says state and territory cooling-off periods and statutory warranties don’t apply to private sellers. Consumer Affairs Victoria, for example, says Victoria’s cooling-off period applies to cars bought from licensed motor car traders. In a private sale, the answer comes back to what you agreed.
The buyer’s reason still matters. Here’s how the common cases usually play out.
| What happened | What usually decides it | A sensible response |
|---|---|---|
| Inspection found a fault you didn’t disclose | What you told the buyer, and your terms | Refund it. Keeping it is hard to defend. |
| Buyer’s finance was declined | Whether you agreed the sale depended on finance | Refund it if you agreed. If not, check your terms. |
| Buyer simply changed their mind | Your written terms | Point to the terms. Some sellers refund part to close it off. |
| Buyer missed the balance deadline | Your deadline clause | Lapse the deal in writing, then follow your terms. |
| You found another buyer | You’re the one pulling out | Refund it in full, promptly. |
Disclosure cuts both ways. In Western Australia, Consumer Protection says a private seller may be held liable for a serious defect they knew about and didn’t tell the buyer about. Telling buyers about damage, warning lights and service gaps before they pay a deposit is your best protection against a refund argument later.
If a dispute over a deposit turns serious, get legal advice before it escalates. Legal Aid and community legal centres in your state are a good free starting point.
Which deposit tricks should you watch for?
Most deposit problems are honest buyers changing their minds. A few are scams, and they follow familiar patterns. Scamwatch lists these warning signs:
- A buyer pays more than the agreed price and asks you to refund the difference. Our guide to the overpayment scam explains how it works.
- A buyer who is happy to buy an expensive item without seeing it in person.
- An account holder’s name that doesn’t match the person you think you’re dealing with.
Watch for these too:
- Proof of payment that’s only a screenshot or an email, with nothing in your account.
- Anyone asking you to pay a fee so you can receive their deposit.
- A refund request asking you to send the money to a different account from the one it came from.
If you think you’ve been caught, contact your bank immediately. IDCARE, a national identity and cyber support service, is on 1800 595 160, and you can report the scam to Scamwatch.
How does the deposit work when you sell to us?
It follows the same order NRMA suggests for a private sale, with a licensed dealer as the buyer. You get a genuine offer by phone, then a deposit (often the same day), then an inspection at a time and place that suits you. The balance goes into your bank account, and the car is collected only after you confirm the funds have cleared. The order never changes, so the deposit lands before the inspection, not after it.
“I had a deposit in my bank account that night,” Corey K wrote. Ray Murray noticed the same order: “A deposit was put into an account within a short time (without them even inspecting the car),” he wrote. Their full reviews are on our testimonials page.
Not every buyer works this way. Some instant-offer services pay after the car has been handed over, and our guide to being paid before pickup or after handover compares the two. Whoever you sell to, us included, ask how much the deposit is and what happens to it if the inspection turns up something unexpected. Get that answer before you accept.
Private deposit or dealer deposit: which suits you?
Taking a deposit in a private sale works when the buyer is keen, the terms are written down and you have time to wait out an inspection and a balance transfer. It goes wrong when the terms are vague, the money isn’t checked in your own account or the keys leave early.
If you’d rather not vet buyers, draft terms or chase a balance yourself, selling to us takes that work off your hands. We prepare the sale paperwork, help with the transfer of ownership and arrange collection anywhere in Australia once you’ve confirmed the funds have cleared. We buy cars, utes, SUVs and 4WDs 2021 or newer with 100,000 km or less. If yours is older or has more kilometres, send it through anyway and we will tell you straight away if we can help.
Start with a free valuation, read how it works, or call 1800 73 55 73. There’s no obligation and no fees taken out of the offer.
Questions sellers ask
Is a deposit legally binding in a private car sale?
It can be, and if it is, it binds you as well as the buyer. Once you accept a deposit on an agreed price, you're expected to hold the car for that buyer on the terms you agreed, so don't keep showing it to others. How a dispute plays out depends on what was said and written, so keep the messages and the receipt, and get legal advice if a disagreement becomes serious.
Should I take a deposit by PayID?
A PayID is an identifier, such as your mobile number, email address or ABN, linked to your bank account so people can pay money in, so it can work for a deposit. Find the payment in your own banking app before you take the car off the market, and check the payer's name matches your buyer. Never pay anything to 'unlock' or 'release' a payment someone says they've sent.
Can I take deposits from two buyers at once?
You shouldn't. A deposit holds the car for one buyer, so taking a second sets you up to break your word to someone. If the first buyer misses their deadline, tell them in writing that the deal has lapsed and deal with their deposit as your terms say, then move on to the next buyer.
Does the deposit come off the sale price?
Yes. A deposit is a part payment, so the balance is the agreed price minus the deposit. Write both figures on the receipt so nobody can argue about the balance at handover.
