I recently put my car up for sale. We have had a lot of interest, but no offers yet.
A Bite on the Car
This week we had a young man come to look at the car. He wants to buy the car, but he won’t be able to get the money for a couple weeks. It’s actually not as strange as it sounds. He’s an exchange student at the University and he needs to get the money from his parents back home.
Waiting to Sell
Since we are refinancing and turning over our credit cards it’s not actually that bad if we wait another month or two before we buy a new car; it actually works out a little better.
Down Payment to Hold the Car
We requested 2.5% of the price for a down payment. If he doesn’t purchase the car in a month, he will forfeit the down payment. We plan to stop advertising the car, but we will still drive the car.
Similar to Buying a House
We set up the transaction of selling the car similar to that of selling a house; buyers often give a down payment in the form of earnest money, which is forfeited if the closing doesn’t take place.
Action Plan
We’re going to start looking for a replacement car… now that we have an almost deal. We’ll probably hold of on purchasing though, until the deal goes through for sure.
What do you think of the strategy? Would you take a down payment to hold a car?
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Seems fine to me. I’d simply look at it as a non-refundable deposit. If he doesn’t come through on his end of the deal then you can just find another buyer and pocket the deposit.
AndrewMay 19th, 2008 at 11:15 am
I think for me that it depends on the situation. If the car had been on the market for awhile with little interest, then I might agree to the down-payment scenario. Of course, if the offer is a good one and you aren’t in a hurry, then no harm done if the deal falls through, right?
Jeff@MySuper-Charged LifeMay 19th, 2008 at 11:16 am
You’ve been tagged.
creditaddict.comMay 19th, 2008 at 11:36 am
I think this arrangement is called an \”option\”. Essentially the buyer controls the ownership of the car. He can exercise the option within a certain time or forfeit it.
Sounds like a great plan to me.
MITBeta @ Don't Feed The AlligatorsMay 19th, 2008 at 8:33 pm
I would make the buyer sign a well worded, clear legal contract stating the terms. Other than that, why not?
No Debt PlanMay 19th, 2008 at 8:55 pm
Sounds like an excellent way to weed out the people that will waste your time.
Thrifty FemmeMay 19th, 2008 at 9:52 pm
This seems to be a good way for the young man to show his commitment.
If he doesn’t not buy, then he forfeits the 2.5%. I don’t know how much this 2.5% is, but should be a figure that should give him a little pain if lost.
fathersezMay 20th, 2008 at 1:51 am
That’s a good idea. When my friends were moving out of their old house, they were selling some furniture and when their buyer asked to delay the payment, they requested 5% of the price for a down payment. I think any buyer should be okay with down payment b’se it’s a kind of guarantee both for seller and for buyer. If I ever were in such situation, I would do the same you did.
July BucksMay 20th, 2008 at 10:09 am
@ All: You guys rock! Thanks for all the reassurances.
Oh, and 2.5% was $500, so I don’t think he’d want to walk away from it!
May 30th, 2008 at 3:33 pm