Checked October 2026. This is general information, not legal or financial advice. Rules differ by province and change, so use the regulator links for your province.

Finding a car you like is exciting. Sending a big payment for one you may not have seen is nerve-wracking, and that is normal. Some ways of paying are very hard to undo, so this guide uses what Canadian regulators, banks and Interac say themselves, not any one seller.

The short answer

Ontario's regulator, OMVIC, says never to send money in response to an online listing without seeing and driving the car first. If you do buy remotely from a licensed dealer, our advice is to pay only once you hold a signed, written contract with every deposit term and promise in writing. Interac and National Bank say a deposited e-Transfer and a delivered bank draft cannot be undone. A credit card may add protection, but only under your issuer's rules, so ask first.

What is a deposit, and can you get it back?

A deposit is money you leave to hold, find or order a car before the deal is done. The Vehicle Sales Authority of British Columbia (VSA) says it may be for holding a vehicle, locating one from another dealer, bringing one in from the manufacturer, or arranging financing. Whether it comes back depends on the terms, which differ by province:

• Ontario. OMVIC says that if you give a dealer a deposit but sign no contract, you can ask for it back at any time and the dealer must comply. Once you sign, there is no cooling-off period unless certain conditions are met, such as a condition in your contract that is not met. Get conditions in writing, as verbal promises can be hard to prove. If the dealer agrees to cancel, it can claim reasonable liquidated damages and keep part or all of the deposit. OMVIC's shopping tips page is blunter: "Once you give your deposit and/or sign the contract, you have agreed to purchase or lease that vehicle." On a deposit with no signed contract, the two pages read differently, so get the terms in writing and ask OMVIC if unsure.

• Alberta. AMVIC says you should never have to give a deposit just to test drive or negotiate, and should have a written sales agreement first. Ask whether the money is a deposit or a down payment, and make sure the agreement says if and when the deposit is refundable. AMVIC says there is no cooling-off period, and that even if a seller agrees to cancel, it may keep your deposit. For online sales, AMVIC says the Internet Sales Contract Regulation allows cancelling in specific circumstances, such as a vehicle that is not as represented, but not because you change your mind.

• British Columbia. The VSA says a dealer must put the purpose, the amount and when the deposit is refundable in writing. A deposit can be kept if you do not go through with the purchase, but may still be refundable if the dealer cannot deliver what was agreed. The VSA does not investigate formal complaints about deposits.

• Federal. The Financial Consumer Agency of Canada (FCAC) says dealers may keep some or all of a deposit if you decide not to buy.

Ask for a receipt every time. AMVIC says a deposit agreement or receipt is not a bill of sale. In Ontario, Ontario.ca says the Motor Vehicle Dealers Compensation Fund protects deposits or payments up to $45,000 if a registered dealer fails to deliver, and OMVIC puts the maximum at $45,000 per vehicle transaction. You cannot claim if you buy privately or from outside the province, and after a dealership closes you need your bill of sale and proof of payment. Buying from another province? Ask that dealer's home regulator what protects your deposit.

Should you ever pay someone to hold a car you have not seen?

OMVIC's answer is no: never send money in response to an online listing without seeing and driving the vehicle in person first. It adds that registered dealers and salespeople will not ask for wire transfers or upfront payments before a sales agreement.

OMVIC's scam signs include a car far from where the ad is posted, excuses why you cannot inspect it, a promise to ship with a money-back guarantee, and a price below market. It warns not to trust that a trust or escrow account is real, and calls payment that cannot be traced, such as wire transfers or cryptocurrency, a red flag. If you cannot travel, it suggests hiring an appraiser or mechanic to inspect the car. The Canadian Anti-Fraud Centre (CAFC) lists motor vehicles among items in fake ads, and describes non-delivery fraud, where a fake seller collects payment and never ships the item. Run any listing that worries you through the Used car scam spotter, and see Online car buying scams in Canada.

How safe is each way of paying?

Interac e-Transfer

Interac's own FAQ says that once a deposit has been made, there is no way to reverse the transaction and you must make arrangements with the recipient. It adds that you should only send transfers to people you know and trust, and take the same precautions as with cash purchases where you may not know the recipient. If you use one for a deposit, do it only with a verified seller, with refund terms in writing first.

Bank draft and certified cheque

National Bank explains that for a bank draft, the bank takes the money from your account and holds it in a reserve account. A certified cheque is similar, except the money is held until it is cashed. Some institutions no longer certify cheques. OMVIC gives bank drafts as an example of a secure channel, and advises not to send money before meeting the seller and checking the car.

There are limits. National Bank says a draft cannot be cancelled once delivered, even if you were sold a substandard product. It also says a draft can be counterfeited, just like a cheque, and CIBC lists bank drafts among the forms counterfeit cheques can take.

If you are selling your old car and a buyer offers a draft, National Bank says to contact the issuing bank to verify it, or better, go to the bank with the buyer to cash it, and to be wary of anyone who insists on closing the sale quickly, for example outside bank hours. It also says to allow a few days for funds to become available after depositing a draft, so ask your bank how long before you hand over keys.

The CAFC also warns of fake payment confirmations, fake "etransfer" emails and texts aimed at sellers, and overpayment frauds. Our tip: check that the money is in your own account.

Credit card and debit

The CAFC advises a payment method with fraud protection, for example a credit card, and OMVIC says not to give a card number before doing your homework on the seller. Here is what the FCAC says, and where it stops:

• If a bank issued your credit card, the most you owe for an unauthorized transaction is $50 by law, unless you demonstrated gross negligence. This applies to federally regulated institutions. The FCAC describes an unauthorized transaction as generally one you did not make or approve, so it does not say how a payment you chose to make to a seller who never delivers is treated. Ask your issuer.

• Notify your issuer without delay about a suspicious transaction. Your account agreement may set a deadline.

• In a 2020 briefing note, the FCAC described a chargeback as a request that your issuer reverse a disputed transaction, and said each card network has its own guidelines. Ask your issuer what applies to a deposit.

• For debit, the FCAC's voluntary debit card code says a cardholder should resolve merchandise problems with the retailer. Ask your bank what else it offers.

Because a deposited e-Transfer cannot be reversed, a card is worth asking about for a deposit, but it is not a promise of a refund.

Financing

The FCAC says most dealerships arrange car loans with a lender, and you may borrow from your own bank instead. Get several quotes, and sign the application for a quote but not a sales agreement until you decide. Ask for a copy of the disclosure statement of the total cost of borrowing. Most provinces and territories have no cooling-off period on car loans. See Get a car loan approved online in Canada.

What should you check before the money moves?

Checking the seller, each document and the payment method one by one is tedious, and it is the kind of legwork Uobo does by text. Our checklist:

1. The seller is licensed or registered. In Ontario, use OMVIC's search tool.

2. The seller's identity matches the vehicle registration, and you have a vehicle history report. OMVIC also says to get an Ontario UVIP.

3. The deposit terms are in writing, with a receipt.

4. A complete bill of sale lists the price, fees and every promise. The Car purchase contract checklist helps.

5. You asked about payment, refunds and fees. The Questions to ask a car dealer list covers these.

6. You are not being rushed.

See also whether buying a car online is safe and can you return a car bought online.

What if you think you were scammed?

The CAFC says to:

1. Gather documents, receipts and copies of emails and texts.

2. Report it to the financial institution that transferred the money. Interac also points to your bank or credit union.

3. Report it to your local police and get a file number.

4. Report it to the CAFC online, which can be anonymous, or by phone from its site.

5. If it happened through a website, report it to the site, for example with "Report an Ad".

OMVIC says investigations and prosecutions of online scams are quite difficult to conduct, and that Ontario's consumer protection laws protect you only if you bought from a registered dealer. Our view: you can be excited about this purchase and still take your time. Asking for the terms in writing, or a pause to check, is reasonable.

Try these free tools

• Used car scam spotter: checks a listing for warning signs.

• Car purchase contract checklist: reviews price, fees, deposit terms and promises before you sign.

• Questions to ask a car dealer: what to ask about payment, refunds and fees.

Want help with the legwork? Text Uobo, a personal car agent that does the research, checks and dealer legwork by text, and is free for shoppers. Start here.