Would You Take a Down Payment on a Car?

Posted by Madison on May 19, 2008

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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Comments to Would You Take a Down Payment on a Car?

  1. 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.

    Andrew

  2. 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 Life

  3. 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 Alligators

  4. I would make the buyer sign a well worded, clear legal contract stating the terms. Other than that, why not?

    No Debt Plan

  5. Sounds like an excellent way to weed out the people that will waste your time.

    Thrifty Femme

  6. 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.

    fathersez

  7. 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 Bucks

  8. @ 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!

    Madison

  9. I have been looking at home gym equipment for months. I’m stoked I happened to though. This content has made my task much faster.

    Soraya Lerner

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