Car Deposit Trouble

January 15, 2005 8:49 AM

I've just purchased my very first new car. However, in the process, I visited nine dealerships - 7 of them asked me for a cash deposit before they would even discuss prices with me. The one dealership that I gave a $500CDN deposit to (I later changed my mind on it) took almost 2 hours to refund my deposit. What are my rights, and what are strategies to get around this deposit requirement?
posted by burhan to travel & transportation (39 comments total)

threaten to walk out and buy somewhere else ... and then do it

there is NO reason why you should have to put money down or fill out a loan application to look at cars or discuss price
posted by pyramid termite at 8:58 AM on January 15, 2005

If someone asked for a cash deposit before discussing a transaction I'd immediately ask to talk to the owner or general manager. If this was the GM's policy, I'd explode and walk out.
Unless something is vastly different in Canada this sounds very exploitive and strange.

Take home message for this is: know the field, be confident, and stand tall. Those who look like they can hit back don't get hit often.
posted by sled at 9:10 AM on January 15, 2005

That is crazy. I can't imagine an American car dealership doing such a thing, even though they are dark and evil places. Why would anybody go a store where you had to put money down just to browse? Come buy a car from an American dealership. They'll still screw you, but at least it'll be after you buy it.
posted by Optimus Chyme at 9:12 AM on January 15, 2005

Were they all dealerships for a particular high-demand car (say, a new Vette or a Mini)?
posted by mendel at 9:16 AM on January 15, 2005

I've never heard of this in America.
posted by grouse at 9:22 AM on January 15, 2005

I am horrified with how you were treated. What city do you live in? I'm in Vancouver.

When I bought my car some years ago, I visited many dealerships while I was deciding make and model. The Mazda dealer didn't allow me to drive the car off the lot when test-driving, the salesguy had to drive it off the lot, then we had to switch. He stopped near a wooded lot. Needless to say I didn't buy a Mazda.

The Honda dealership gave me the hard sell tactic of sitting me in a tiny 'managers' room with two sales guys between me and the door. Didn't buy a Honda either.

Acura was a nightmare.

Volkswagen didn't have the car that I wanted, and the sullen salesguy didn't appear to want to make much effort in estimating when they could get one in.

Ended up buying a nice German car partly because they gave me an excellent price on a car that suited all of my requirements, but also because they treated me with class, professionalism and respect during the entire process. I still own the car, nine years later, and it's given me no trouble whatsoever during this time.

But no one ever required me to put down $500 before discussing price.

I'd get a lawyer friend to lean on them to get the money back. And I'd write the local papers about the terrible treatment you received from those people.
posted by seawallrunner at 9:32 AM on January 15, 2005

I had a dealer ask me for either a deposit or a credit card before they'd really go into it with me - to show I was serious. I very bluntly said that I was serious, but that I didn't intend to give them money to confirm it, and either they could discuss price with me without a deposit, or I'd find another dealership that would. They gave in.

Getting a deposit is a negotiating technique. It commits you to the transaction and gives them something to hold over your head. Never do it until you're ready to sign papers.
posted by jacquilynne at 9:35 AM on January 15, 2005

This isn't any help either, but I've never heard of this in Canada either. Just to discuss prices?
posted by fionab at 9:35 AM on January 15, 2005

Not really related, but some banks will send agents to negotiate for you. I'm lucky to be a USAA member and when (if!!!) I buy a new car i'm planning on asking an agent to go in my place - at that point it's one professional to another, I understand that the savings can be pretty substantial if you have a professrional to cut through the 'special offers' for you.
posted by prettyboyfloyd at 9:44 AM on January 15, 2005 [1 favorite]

Wow, that's crazy. When I was buying an Acura (in Rhode Island), all I had to show was my license in-order to test drive it. No deposit, no nothing.

They wanted to sell me a car, and it just seems crazy that they'd make you jump through hoops like that just to look at a new car...
posted by SweetJesus at 9:47 AM on January 15, 2005

If a car dealer asked me to put down money up front for the privilege of allowing him to try to sell me a car, I'd never stop laughing at him. I'd still be laughing as I walked out the door. That's ludicrous.

Edmunds.com has a long but very worthwhile article called "Confessions of a Car Salesman" - one of their writers went undercover and worked at a couple of car dealerships for a month. A real eye-opener (and I'm reasonably sure that I first saw this link on MeFi.)
posted by enrevanche at 9:50 AM on January 15, 2005 [1 favorite]

Sorry, bad article link above. Try this one:

"Confessions of a Car Salesman."
posted by enrevanche at 9:53 AM on January 15, 2005

When they try this, leave. Car dealers pull crap like this because enough of their customers let them.
posted by normy at 9:56 AM on January 15, 2005

I read your blog entry burhan about buying a Saturn. So, was this a tactic from the Saturn dealers in Calgary, or was it a tactic that other dealers engaged in, and you ended up buying a Saturn because the car fit your requirements and they treated you professionally?
posted by seawallrunner at 9:57 AM on January 15, 2005

I'd get a lawyer friend to lean on them to get the money back. And I'd write the local papers about the terrible treatment you received from those people.
posted by seawallrunner at 9:32 AM PST on January 15
Um, what? burhan's deposit has been returned, and there's no loss (apart from burhan's time, of course).

Tell all your friends, colleagues and acquaintances, and hope that has a negative impact on sales, is probably all you can do. There is no physical or economic loss, right? So what exactly can be sued for?
posted by dash_slot- at 10:03 AM on January 15, 2005

I went to several dealerships - My car broke down in Edmonton while visiting my folks, and I absolutely had to purchase a car to get the wife and kids back to Calgary (and to get back to work).

I visited two Hyundai dealerships, as well as 2 Nissan dealerships, 1 Ford, 1 Toyota, 2 chrysler dealerships as well as a few others.

The Hyundai dealership asked for an immediate down payment to show I was serious - this was to show I was "serious" - they wouldn't even give me pricing until I gave them some cash. I ended up giving them $500 on my Amex (this turned out to be important)

At the end of the day, I ended up buying a Saturn (go figure) - mostly because a) the sales rep was extremely knowledgable, b) he didn't run to the manager a single time, c) he spent 6 hours with me before I even made a commitment, and d) how they dealt with my trade in..

What the other dealerships were doing was this: I had a 4000 Lein on my car (the broken one). Each dealer was essentially saying "Okay - the car you want is $20,000, we're adding another $4k to cover your lein, so that puts you at $24k. Now - your car is only worth $2k, so I've lost $2k on it seeing as I've already covered you for $4k, plus another $2k in repairs - your new car now costs $28,889 including freight+shipping, not including taxes. 3.9% on a 4 year term.

This put me in a horrible predicament - Hyundai, and Ford both came up with this financing scheme.

Saturn had all their prices posted up on a board. What they did was extend me $4k for my lein, but then he told me - the car is yours - "all we did was pay off the lein and now you're paying us - it's simply a transfer of the car loan applied to your new car". Further, they offered me cash for my broken undrivable car...

Not meaning to act like an advert (pardon me if this is, I'm new) but the experience taught me that "maybe the other dealers were ripping me off"

After purchasing my Saturn, I went back to hyundai to get my money back. It took almost 20 minutes - the manager (who was required to process the credit to my amex) dissapeared upstairs. Then they couldn't find my file. Then there was a mysterious meeting... I threatened to call Amex and cancel the payment - I was dialing Amex on the phone, when mysteriously, the manager showed up, signed a small peice of paper, before the receptionist credited my amex.

A horrible experience with respect to the desposit... Which got me thinking (which is why I started the thread) - what are my rights? Does this happen to everyone, and if not, how do they get around it.

Thank you guys so much for your comments so far - I'm continuing to learn so much!
posted by burhan at 10:05 AM on January 15, 2005

Seawallrunner: with regards to the mazda dealer driving the car off the lot - they Hyundai dealership did the same thing to us - he had to drive it off the lot, he pulled into a side street about 2km away, and then my wife got to sit in the car and drive it. He said that it was Hyundai policy...

Oddly enough, it made sense (what if we smashed into other cars on the lot?) but now, come to think of it, no other dealership has ever done this to us.

(I pick up my new car at 1:30MST!! My first ever brand-new vehicle.. I'm actually going to read the manual to make sure I don't wreck anything by accident)
posted by burhan at 10:16 AM on January 15, 2005

jacquilynne has it correct. The deposit is considered "committment." It's a type of sales method. Some dealers use, some don't. If you don't want to give a deposit, don't. Just go to another dealer.

I certainly wouldn't hold one dealer's sales practices against the manufacturer. The manufacturers don't own the dealerships, unless they dealer is on a dealer development program and then it's really just a finance option for the dealer.
posted by Juicylicious at 10:20 AM on January 15, 2005

It's definitely not Hyundai policy for the dealer to drive the car off the lot. One dealer just gave me the keys and let me go at it -- he didn't even go along for the ride. Another pulled the car out of the lot for me to the front of the dealership, then switched to the passenger side to let me drive.

Most car dealers are scumbags, and they can be just as bad regardless of what make you buy. One of the main reasons I bought my Hyundai from the dealer I bought it from is that the salesman said, "Okay, here's the numbers. I know you're going to go home and look this up on the Internet. When you see they're real you'll come back and buy the car, because you're sick of being jerked around." And that's basically what happened, despite the fact that he didn't have the exact car I wanted in stock at the time. I waited a few days for the next shipment and bought it then.
posted by kindall at 10:25 AM on January 15, 2005

Many dealerships located on busy roads want to drive you off the lot and onto a less crowded road before you drive. You would be surprised at the stuff some people do in a new and unfamiliar car. It's a little insulting to be sure, but not such a big deal. As for a deposit just to talk price, that is ludicrous. Perhaps the fact that you were from out of town had something to do with it. Nevertheless, that is just plain wrong. My guess is that if you pushed a little harder they would have relented. I would think a customer who states that they will buy a car in the next day or two and it is just a matter of which one would be a salesman's dream.
posted by caddis at 11:07 AM on January 15, 2005

S.Z.J. There's no way in hell I'd put up with any of that bullshit. I get pissy when the salesdroid wants to ride in the car with me. I'd be tempted to key cars on the way out of the lot if they were so audacious as to demand a deposit before negotiating a price!

But I have a bad attitude. I walk into dealerships and tell them to "Cut the crap. Give me the best price and if it meets my expectations, I'll buy. If it doesn't, I walk out and don't come back."

I loathe car-shopping.
posted by five fresh fish at 11:07 AM on January 15, 2005

Don't take that kind of shit from a car dealer. They're the people desperate for your money, you're not desperate for their product. If you go along with such mistreatment as the requirement of a deposit, you're starting from the get go in an extremely weak bargaining position.

Rule number one of haggling is not to make concessions before you even start haggling.
posted by majick at 11:31 AM on January 15, 2005

With the pulling the car out of the lot for you thing, that's not unheard of. The Honda dealer where I get my car serviced used to always pull cars off the lot - whether you were testing or had just got service or whatever. Because they had a very tight lot, and they'd had a lot of trouble with people dinging other cars. They've since moved to a different location with a much more spacious lot and no longer do this.
posted by jacquilynne at 11:35 AM on January 15, 2005

Always, always negotiate the price and the financing separately. With the latter, there's even more wiggle room because banks can compete with the car dealers.

Car shopping sucks. Saturn used to make a point of marketing friendly, no hassle shopping, but I never took that for granted and I assume that you pay a premium for not having to put up with their bullshit.

When I bought my Honda, BTW, I threatened to walk away from the deal over a $500 difference. They ended up offering me a job.
posted by Saucy Intruder at 12:11 PM on January 15, 2005

I think next time you should avoid wearing your shirt that says "CHUMP" when shopping for high-ticket items. That and play your cards very close to your chest whenever dealing with sales people, never walk in and say, for example, "My car just died and I need a new car now!"
posted by revgeorge at 12:18 PM on January 15, 2005

When I bought my Honda, I took a friend with me. The dealership had a computer terminal in the lobby so you could browse their site, but there was nothing to prevent you from using it for something else. When I sat down to discuss pricing, she went online (I think to edmunds) and got actual dealer cost and the site's recommendation on fair pricing. After they had presented their first price to me, I went out to "discuss it" with my friend and called the salesguy over to look at what she'd found. He looked shell shocked, but he agreed to meet that price. When I went back to pick up my car the next week the lobby computer was gone.
posted by cali at 12:32 PM on January 15, 2005

some banks will send agents to negotiate for you.

No they don't. A lot of credit unions and even some banks work with "fleet" or "lease" agents. Basically, they work for an independent third party company or the dealership. The ones that work for dealerships basically sell cars at invoice. The ones that work for third parties arrange for the cars to be sold at invoice, plus their fee. You're much better off dealing with the dealership fleet salesperson.

There seems to be so much anger, as well as misconceptions about car sales in this thread. If you want a good deal on a new car, buy it through a fleet agent at invoice, plus a hundred or two dollars. Here's a fact, dealers do not make money on NEW car sales. All the money is in the service & finance departments and USED car sales. The point of selling new cars is to continue the flow of customers to the service department and to make money on financing. Oh and btw, banks do not compete with dealerships because dealerships are not creditors. Dealerships just write contracts for lenders, many of which are the very banks that you may think are competing with the dealer.

As for not letting a customer drive off the lot, it probably has to do with insurance requirements.
posted by Juicylicious at 1:32 PM on January 15, 2005

When my ex-boyfriend was looking for a car some years back, we went to a local Ford dealership. The sales guy insisted that my ex fill out a financing application and get it fully approved before he could look at anything on the lot. Needless to say, we left. (The sales guy also tried to convince me that I should trade in my car for him to get a car - not happening, and then tried to guilt me into cosigning for him - also not happening.)

I have a Saturn and I bought it because I like the car, but also because I felt comfortable in the dealership. I'm female, and I went in alone initially, and I was treated with respect the entire time. (Some of the places I wouldn't want to get near without bringing my dad, and a couple places where I did go with my dad, the sales guys insisted on only talking to him, even though it was made very clear that I was buying the car, not my dad.) That really does mean a lot.
posted by SisterHavana at 1:42 PM on January 15, 2005

Outrageous. I'd be going to the local papers to expose this behavior.

My new-car story (not nearly as bad, but sort of amusing). I went to the local dealership to check out and test drive after getting a couple of quotes online. My preference was to purchase locally as long as it didn't cost me significantly more to do so, since I figured that they're spending time with me on the test drive and answering other questions.

Anyway, we finished the test drive, and I'm back at the salesperson's desk. I pull out my checkbook, and I ask him how much the car would cost. I told him I would be paying cash, no financing.

He wouldn't give me a price. He told me to tell HIM what my best offer was, and he'd let me know whether he would match it or not (note: not beat, match). No amount of coaxing would get him to tell me how much the dealership wanted for the car.

Finally, I put my checkbook back in my pocket and walked out, saying, "If you want to sell me this car, tell me how much you're asking by 10am tomorrow. Otherwise, I'm going to buy it somewhere else."

I wound up buying from an online dealership who worked with another local dealer for pickup. The next week, the manager called to ask why I hadn't come back to complete the purchase, and I told him the story.

To this day I wonder why this salesman would forego a sale like that, unless he was afraid I was just using HIM to get a lower price elsewhere, which couldn't have been farther from the truth.
posted by aberrant at 2:01 PM on January 15, 2005

There seems to be so much anger, as well as misconceptions about car sales in this thread.

Gee, I wonder why: The sales guy insisted that my ex fill out a financing application and get it fully approved before he could look at anything on the lot.
posted by five fresh fish at 2:03 PM on January 15, 2005

Another approach..., but I've got the advantage of age over most of you..

I bought cars from the same dealership, the same salesman (and developed a business relationship with the owner of the dealership) for nearly 25 years..... It got to the point that, if i didn't need to do any test drives, I could call the salesman, tell him what I wanted, he would do the work, do the paperwork and it would take me five minutes to pick up the car.

It pays to pick a brand, a dealer, and stick with it... hard to do if you need the "newest, brightest, in style" thing every two years, but if you find a brand you like, it makes buying a car much easier...

Also, NEVER give a dealer money until you've completed the negotiation...If they ask, walk out, you don't want to do business with them even if they back down....

Same with mechanics...find one (recommended), stick with them for as much work as you can.... I've had the same mechanic for about 30 years as well, now his son does the work....

people tend not to screw people they know... (get your minds out of the gutter!)
posted by HuronBob at 2:09 PM on January 15, 2005

I think your problem is you were shopping for your *FIRST* *NEW* car. Basically, you set off all the sucker alarms at the place the minute you came through the door.

The best way to shop for a car is right after having a big argument or while you are extremely angry. They will know right away you've had enough that day and won't take any BS. If you can't do this (hopefully you won't just do it to test!) you need to go in there and just pretend like this is your third car you're buying.

Or, better yet, bring mom and dad. Yeah, it's not fun, and it's not right to have to do that, but these are car salesmen. You have to pick people like this out of your boot waffle.

Even if you did stand fast, the fact they asked you means they think you're an easy mark. I always accompanied my parents through the purchase of many vehicles in Canada and a deposit was never discussed, except perhaps on a used vehicle (since there really *is* only the one that is in that exact condition, they have an excuse). If they think you're an easy mark, if you say no they will just think "Ahhh, he'll be back tomorrow. Big deal."

Sorry to hear about the ordeal. Watch the movie suckers. :)
posted by shepd at 2:10 PM on January 15, 2005

I found buying a new car to be almost traumatic. I wanted to buy a Mini, but the salesmen were so horrible I was actually embarrassed to make an offer. I walked out of a number of dealshipships shaking my head in disbelief. When I decided on a VW, I still went through 3 dealerships, and ended up going to a neighbouring city.

I think buying a car is about head games, and when you start off on the wrong foot, the dealers try to humiliate you. I really knew what I was doing (I'd watched my lovely, likeable mother make young men cry), and I still felt like a chump.

Here's hoping your Saturn lasts a long time. Buying a car sucks.
posted by gesamtkunstwerk at 3:12 PM on January 15, 2005

While we were trying to get our money back from Hyundai, another lady came in and began asking about fuel economy on the Tuscon. The same sales rep that was helping me began to help her. He sat her down, and told her that it was very economical, and then had her write a $100 cheque as a deposit before they could talk further - to show that she was a serious buyer.... For that dealer - it definately seemed like standard practice.

I picked up my Saturn - an interesting experience.

We finished up the final signatures - she went over the paperwork in such incredible detail - for a nerd and not a finance guy, it was near painful... BUT...

She caught two errors where one GM discount wasn't applied, and one small feature charge wasn't accurate. Overall, it saved me $7/month over the 48month term. That was kind of nice.

The sales rep sat me down at his desk and handed me my keys - he then went over the entire warranty plan, and also skimmed the owners manual. He explained how to break in the car, and gave me extra '24 hour roadside assistance' cards (one for my wallet, one for my wife, one in the car, etc.). He took me out in the car to get the first tank filled - during this drive, he made sure that I was acquainted with every control in the car.

It's not like it was neccessary - I rent two cars a week for work, and have driven many models - but still - the extra effort on a busy saturday afternoon was... well... nice.

Overall experience was 9/10 stars.

I agree - it all depends on the dealer. Unfortunately, so many dealers in Edmonton have been under investigation by the gov't for innapropriate practices - I found this site after the Hyundai experience, which luckily had a section for Alberta.
posted by burhan at 5:00 PM on January 15, 2005 [1 favorite]

If you want a good deal on a new car, buy it through a fleet agent at invoice, plus a hundred or two dollars.

How does one do this?
posted by redfoxtail at 5:35 PM on January 15, 2005

I bought my first new car -- a Subaru Outback Limited wagon -- nearly two years ago, and I have to admit it was intimidating as hell. That being said, I'm pretty persistent at learning about these kind of things, and remarkably unaccepting of being duped when I can prevent it, so I vowed to do a lot of research first. And in retrospect, what are my two biggest pieces advice to people who find themselves in this same situation? To do as much negotiation as possible via phone or fax first, and then to spend some quality time at CarBuyingTips.com. In terms of the former, it's much harder to fall prey to sales tactics over the phone, and there's no way for them to force you to give them money either. And in terms of the latter, the site has sections for buying new versus leasing, and there's simply a ton of information, distilled nicely, about the things car dealers do to pad prices and confuse buyers. (Sure, I also spent time reading books and looking at other sites, but I can track about 95% of what I learned to CarBuyingTips.com.)

And the result? Before I ever laid eyes on a salesman, I had a firm guarantee in-hand of a price that was $30 over dealer total cost (note that that's not dealer invoice, which is an inflated price that includes things like floorplan fees and holdbacks). And when I got to the lot, it took about an hour to test-drive the car, talk to the finance guy, and sign the paperwork, and then I was done.

About four months later, I helped my fiancee buy her first new car, and we did the same thing -- and were pleasantly surprised that one of the companies we negotiated with over the phone made a very aggressive offer, on paper. That was like having money in the bank with every other dealer, and we were able to get her car (a Honda Accord) for about $100 over dealer total cost.

In retrospect, it's all a mind game, and understanding that (armed with the right information) you're able to level the playing field, it actually becomes a little bit fun.
posted by delfuego at 6:40 PM on January 15, 2005

delfuego: Why would the dealer sell you a car at $30 over dealer total cost? They must have been desperate to meet some kind of quota or something, because the profit hardly seems worth it.
posted by grouse at 3:58 AM on January 16, 2005

I can't say for sure, but I'd imagine that Juicylicious's comment above about the profit of future business in the service department has a lot to do with it. Or instead, perhaps the car had been on their lot for a while and they were anxious to get rid of the loan they took out to pay for it. Or as you said, there was some other force like a quota operating.

In the end, though, I got the car I wanted for the price I wanted it, and all it took was research.
posted by delfuego at 9:00 AM on January 16, 2005

On a semi-related note, I waltzed into a BMW dealership with one of my friends 2 years ago (both 19yo's) and they let us take a Mini Cooper S (my dream car ahh) out for a test-drive alone. All they did was make a photocopy of my license (which was even out of state).

Maybe higher-end dealers are more trusting? Or maybe it was a fluke.
posted by gtmcknight at 9:26 AM on January 16, 2005