OMVIC Practice Test

What costs can a dealer take out of the deposit if a customer backs out of a deal.

1. More advertising, storage

2. Cleaning

3. Another safety standard certificate

4. Sales training

The correct answer is: More advertising, storage

When a customer backs out of a deal, a dealer may incur certain costs that they can reasonably deduct from the deposit. More advertising and storage are two costs that often arise in such situations. When a vehicle sale falls through, the dealer may need to invest additional funds in advertising to attract new buyers. This is particularly relevant if the car was showcased extensively or if the dealer relies on promotional strategies to maintain sales momentum. Secondly, if the car remains unsold, the dealer might need to store the vehicle for a prolonged period, which can lead to increased costs. Storage fees or the loss of potential sales opportunities while the vehicle occupies space can be significant. Overall, deducting costs associated with advertising and storage is a justifiable practice in the context of the depreciation of the vehicle's value over time and the need to recoup lost resources related to the failed sale.