What is the Difference Between a Deposit and a Down Payment When Purchasing a Car?

[OCalvin]

The difference between a deposit and a down payment when purchasing a car: 1. Different concepts. A down payment is a standardized legal concept with legal binding force; a deposit is not a standardized legal concept and actually has the nature of an advance payment, serving as a payment method for the parties involved. 2. Different liabilities for breach of contract. For a deposit, neither the buyer nor the seller is required to bear civil liability in case of a breach; for a down payment, both the buyer and the seller must bear corresponding civil liabilities in case of a breach. 3. Different forms of fulfillment. A deposit generally does not require a formal written agreement, while a down payment requires a formal written agreement. 4. Different amounts. The amount of a down payment is legally limited—the 'Guaranty Law' stipulates that the down payment cannot exceed 20% of the principal contract amount; the amount of a deposit is freely agreed upon by the parties, and the law generally imposes no restrictions. 5. Different payment methods. A down payment is usually paid in one lump sum, while a deposit can be paid in full at once or in installments.