Distance selling has become a common part of the purchase process over the last year, with restrictions in place limiting how consumers can interact with sellers. This has impacted car dealers, meaning many have operated a distance selling model to keep business moving. However, distance selling comes with a set of government regulations that apply to any goods or services sold online, by TV, mail or over the phone.
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With all sales considered distance sales while showroom floors were closed in recent months, as the ‘normal’ way of operating starts to begin again, there are important aspects car buyers should know and understand about the process. Knowing what distance selling involves for you as a buyer and when it is or is not applicable can change your car buying experience. To help you understand the process better, we’ll explore what the process involves, as well as discussing whether you should ask for a reservation fee or a deposit to secure your car purchase.
What is distance selling?
Distance selling involves the process of the sale of goods or services online, by TV, mail or over the phone. While distance selling regulations were once introduced under European Law, this was replaced by The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, which came into force in mid-2014.
This law sets out expectations for consumers and the required obligations of sellers. It covers everything from the information that must be provided about the goods or services, right to cancel, items/services you cannot return, cancelling contracts, faulty goods and delivery.
How does the reopening of showrooms affect consumers and distance selling?
As dealers can begin reopening the trade forecourts, if this is their primary mode of selling, then the rare instances where sales occur on a ‘sight unseen’ basis would not be eligible under the ‘distance selling’ regulations. Instead, it would be offered under the usual policies held for in-person purchases.
However, if a dealer offers deliveries as part of their normal sale process, then distance sales would be considered withstanding under their usual terms of service. This can however, become confusing when a deposit is taken online even if the buyer hasn’t seen the vehicle. Under the rules of The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, buyers would have up to 14 days to return the car for almost any reason – effectively offering a 14-day test drive if they return.
Before making a purchase, it is important to understand how the dealership you are liaising with is operating to ensure you are aware of what your rights and obligations are as a consumer.
Deposits or reservation fees: which is better?
While some dealers may request a deposit to secure a vehicle purchased by distance, others might offer a reservation. That’s a good thing. But before we get into why, it’s good to know what the difference is between a deposit and a reservation fee.
Deposits are an amount paid to secure a sale, even if you’re buying by distance. This commits you to the purchase. Although, you have rights as a consumer under The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, remember. Usually, you’ll have 14 days to try and then return the car if you don’t like it.
A reservation fee, on the other hand, is a fee taken to remove the car from retail sale to the general public. It essentially holds the item, reserving it for you, just like a holding fee. Now, that means you haven’t committed to a purchase yet, but no one else can buy the vehicle for an agreed period. During this time you can try it out and decide whether or not you want to buy it. Only one person can pay a reservation fee and hold a car at a time.
Now here’s the real difference. Whereas a deposit commits you as a buyer to purchase, a reservation fee does not. On top of this, if you opt for an online deposit, the purchase is considered a distance sale.
While a reservation fee offers a more flexible option for consumers, you must ensure you review and understand all T&C’s involved with the dealer’s reservation fee policy. In some cases, a fee may apply for failed appointments. Or, they may require certain communication to confirm your reservation within a set time period, usually 24 hours. They also may have the option to release it for sale again, if these conditions are not met.
With dealerships once again being able to conduct sales on showroom premises, the way distance selling operates will change for many. While some will still have the option in place, others won’t. Meaning the terms set out in legislation may no longer apply. To offer yourself more security and flexibility, enquire about reservation fees to prevent the vehicle you are interested in being sold before you can view it.
To position yourself to negotiate the best deal possible on a used vehicle, conduct a car check with Car Guide. This ensures you are aware of both the vehicle’s history and don’t discover any nasty surprises after your purchase. With buyers wanting to save money where possible on the purchase of a used car, a free vehicle history check is always an option but it won’t give you a full picture. A detailed car check, like Car Guide’s report can save you a lot of money and a headache in the long run, so definitely worth every penny.