Before you pay · Cars
How to check a car dealer is legit before paying a deposit
To check a car dealer is legit, find the limited company behind the website on Companies House, confirm the dealer is on the FCA register if it offers finance, check the vehicle’s MOT history and outstanding finance, and pay a reservation fee — not a deposit — by credit card. A genuine dealer holds a car for £99–£500 refundable; one that wants thousands by bank transfer before you have seen the car is asking you to take its risk.
Key facts
- A dealer that arranges finance must be authorised by the Financial Conduct Authority for credit broking, or be an appointed representative of a firm that is; the Financial Services Register is free to search (Financial Services and Markets Act 2000, s.19).
- A car bought online or over the phone without visiting the dealer carries a 14-day right to cancel from delivery, for any reason (Consumer Contracts Regulations 2013, reg. 29–30); a car bought on the forecourt does not.
- Any car bought from a dealer must be of satisfactory quality, and a fault found in the first 30 days gives a short-term right to reject for a full refund (Consumer Rights Act 2015, ss.9 and 22).
- MOT history, mileage at each test and tax status are free from DVLA and DVSA; outstanding finance, write-off and theft markers require a paid provenance check (typically £10–£20).
- SafeToPay deposit guidance for vehicles is a reservation fee, not a percentage: a small refundable sum to hold the car, the balance on collection after inspection.
Reservation fee vs deposit
A reservation fee holds a specific car for a few days while you arrange to see it; it is small, and a reputable dealer refunds it if you do not proceed after inspection. A deposit is a part-payment on a contract to buy: it commits you, and a dealer may keep a proportionate part of it if you withdraw. Online dealers blur the two on purpose.
What is normal
£99–£500 to reserve, refundable if the car is not as described or you decide against it after viewing; balance on collection or delivery, by card or bank transfer to the company named on the invoice. Some large online retailers take the full price on order with a 14-day return — that is a distance sale with cancellation rights, and it is fine if the company is what it says it is.
What is not
A “deposit” of £1,000–£5,000 by bank transfer to secure a car you have not seen, a demand for the fee to a personal account, or a fee described as non-refundable in all circumstances. Under the Consumer Rights Act a term that lets the dealer keep the whole deposit whatever happens is likely to be unfair; under common sense a dealer who needs your money before you have seen the car is short of something.
| Reservation fee | Deposit | |
|---|---|---|
| Amount | £99–£500 | Often 10% or more |
| Purpose | Hold the car for a few days | Part-payment under a contract to buy |
| If you do not proceed after viewing | Refunded (check the terms in writing) | Dealer may keep actual losses only |
| Paid to | The dealer’s company, by card | The dealer’s company, by card |
| Warning sign | Non-refundable in all circumstances | Before viewing; bank transfer only; personal account |
Check the dealer: five things on the public record
1. The company behind the website
A dealer’s website shows a trading name; the invoice and any finance agreement will show a limited company. The company number should be in the footer (it is required by the Companies Act 2006). Check it on Companies House: how long it has existed, whether accounts are filed and on time, whether there is a strike-off notice, and how many companies the director has had dissolved. A free company check on the website address does this in a minute; the pattern of phoenix companies is common in used-car retail.
2. The FCA register, if finance is offered
“Finance available”, “from £199 a month”, “representative APR” — any of these means the dealer is credit broking and must be on the Financial Services Register, either authorised or as an appointed representative of a broker or lender. Search the register by the company’s legal name, not the trading name. A dealer offering finance with no entry is either breaking the law or using a lender’s name it is not entitled to.
3. The trading address
A used-car dealer has a forecourt, a unit or at least a compound. The website should show a postcode; Google’s listing should show the same place with photographs; the registered office may be an accountant’s address, which is fine if the trading address is real. No postcode, a residential address for a “dealership” with 40 cars in stock, or a Google listing at a different town are each worth a question. Our reports show the distance between the registered office and where the business actually trades.
4. Reviews with a history
Look for the oldest Google review, not the average. A dealer with 200 five-star reviews all posted in the last four months and a company incorporated five months ago is a pattern. Check the profile’s address matches the website.
5. Trade schemes that mean something
The Motor Ombudsman’s codes of practice (accredited dealers are listed on its website) give you a free dispute route; AA and RAC dealer schemes involve inspections. A logo without a searchable listing means nothing — how to verify a trade badge applies here too.
Check the car: what is free and what costs £15
- Free — MOT history (gov.uk): every test result since 2005, with recorded mileage. A mileage that goes down, or a car with no MOT history at all for its age, is a stop.
- Free — DVLA vehicle enquiry: make, colour, engine size, first registration, tax and MOT status. Compare with the advert.
- Paid, £10–£20 — provenance check (HPI, Experian AutoCheck and others): outstanding finance, insurance write-off category, stolen marker, number of previous keepers, plate changes. Outstanding finance is the one that matters most: the lender owns the car until it is settled, whoever you paid.
- On the day — V5C logbook: the dealer should hold it; the VIN on the logbook must match the plate in the windscreen and the plate under the bonnet. A dealer who “will send the V5C on” is not a dealer to pay in full.
A dealer website from a real check
Polished website with 60 cars in stock, finance calculator and “family business since 1998”. No company number on the site; the domain was registered eleven weeks earlier; no Google listing; the photographs of the “showroom” belong to a real dealership 40 miles away, whose website the text had been copied from. The reservation process asked for a £500 fee by bank transfer to secure delivery. Nothing here could be checked, which was the verdict: not “scam”, but not a business you can identify, and therefore not one to pay.
The same check on a genuine dealer looks dull: a company with several years on the register, accounts filed, an FCA entry in the same legal name, a Google listing at the forecourt with reviews going back years, a postcode on every page. Dull is what you are paying for.
Enter a website address, e.g. example-motors.co.uk
How to pay a car dealer safely
- Check the company, the FCA entry and the address before you pay anything — the free check covers the first and third; the FCA register takes one search.
- Reserve, don’t deposit. Pay a reservation fee of up to a few hundred pounds, by credit card, with the refund terms in writing.
- See the car before the balance — or, if buying at a distance, make sure the contract is with the limited company and that you understand the 14-day cancellation right applies to you.
- Run the paid provenance check on the VIN before the balance, not after. Outstanding finance is not your problem to discover on resale.
- Pay the balance in the company’s legal name, by card where accepted (Section 75 covers the whole price between £100 and £30,000 if any part is on a credit card) or by bank transfer confirmed by phone on a number from the website, never from an email. Read what a changed bank details message does to a car purchase.
- Leave with the V5C new-keeper slip, the invoice and the keys — and a copy of the finance agreement if there is one.
Frequently asked questions
Is a car reservation fee refundable?
Usually yes, if you do not proceed after viewing or the car is not as described — but only if the dealer’s terms say so, so get them in writing before paying. A fee described as non-refundable in every circumstance is a warning sign, and a term allowing the dealer to keep it regardless of reason may be unfair under the Consumer Rights Act 2015.
Can I cancel a car bought online?
Yes. A car bought at a distance — online or by phone, without visiting the dealer — carries a 14-day right to cancel from the day it is delivered, for any reason, under the Consumer Contracts Regulations 2013. The dealer may deduct for use beyond what was needed to inspect it. A car bought on the forecourt has no cooling-off period.
How do I check a car dealer is FCA registered?
Search register.fca.org.uk by the dealer’s legal company name (from Companies House, not the trading name). It should appear as authorised for credit broking or as an appointed representative of a named firm. A dealer offering finance with no entry is not entitled to arrange it.
What if the car has outstanding finance?
The finance company owns the car until the agreement is settled, whoever you paid. A dealer must settle it before or at sale; ask for the settlement confirmation. A paid provenance check before you pay the balance is the only way to know.
Should I pay a car dealer by bank transfer?
For the balance, a bank transfer to the company named on the invoice is normal — after you have seen the car, confirmed the details by phone and run the provenance check. For the reservation fee, use a credit card. Never transfer money to a personal account or before viewing.
Does Section 75 cover a used car?
Yes, if the price is £100–£30,000 and any part is paid by credit card — even the reservation fee. The card issuer is then jointly liable with the dealer for misrepresentation or breach of contract. Cars above £30,000 are outside Section 75 but may be covered by section 75A if bought on linked finance.
Sources
- Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, Part 3 — right to cancel distance contracts.
- Consumer Rights Act 2015, Part 1 Chapter 2 — satisfactory quality and the short-term right to reject.
- Financial Services and Markets Act 2000, section 19 — the general prohibition; credit broking as a regulated activity.
- Financial Services Register.
- Check the MOT history of a vehicle (DVSA) and DVLA vehicle enquiry.
- The Motor Ombudsman — accredited dealers and dispute resolution.
- SafeToPay methodology v1.2 — deposit guidance for vehicles.
Check the dealer before the reservation fee
Free, no sign-up, about a minute.
Enter a website address, e.g. example-motors.co.uk