About six years ago I was looking into trading in my car to buy a truck. I did some research and then found the truck I wanted at a local dealership. I took the truck out for a test drive and made an offer to the salesman. He said he needed a day to work out all of the financing numbers so I left him with a $200 deposit. This is the story of how I almost lost that deposit.
I'd been driving my 1994 Geo Metro for about five years at this point. The car was paid for and did not have any mechanical problems. The only problem I had was that I worked in the North Western Connecticut hills and when it snowed my car was near useless. I wanted a good 4x4 truck and I settled on a Toyota truck that a friend of mine recommended.
I checked the newspapers (this was 1999 and auto websites were not what they are today) and found a good used one on a dealer's lot near where I worked in Torrington CT. I drove there after work to test drive the truck and I liked it.
When I sat down with the salesman we talked pricing and financing. I was going to trade in my car plus use cash as a down payment. I gave him my maximum monthly payment offer and the information to pull a credit check. Before I left I also gave him a $200 deposit to hold the vehicle. If he was unable to make the numbers work I would get my deposit back. I left feeling pretty good about the deal.
About ten minutes after heading home I realized that I had made one dreadful mistake. Even though I told him what my maximum monthly payment would be and we agreed on a price for the vehicle I did not tell him what my maximum term on the loan would be. Fear settled in when I though about them jacking up the interest rate and the loan term to make it work out exactly to my maximum payment. I also began to have second thoughts about the truck.
The next day I arrived at the dealership, no longer interested in buying the truck and certain I would lose my deposit. I was not prepared for the shock of my life. They had pushed the loan length out to 72 months! Now, I was working under the assumption that the longest new car loan was 60 months and that used car loans would be even shorter than that. Needless to say I felt that my deposit was long gone now. I had been out-witted and had to either buy the truck or lose the money.
Almost! There was one thing that worked in my favor, greed. The dealership was so greedy that they could not make the numbers work. The payment they had worked out was $2 higher than what I had told them I would accept! Rather than drop a few dollars off of the price of the vehicle they had tried to push the loan out over a longer and longer term. Just think, $2 over 72 months is only $144. If they had only dropped the price of the vehicle by $144 they would have had me! Because of their own greed they lost a sale.
The important lesson to learn here is that no matter how good you think your deal is always check it twice. My mistake in leaving the term of the loan open-ended almost cost me big time. Don't let it happen to you.