Despite finding what both your wife and you like, if this was me, I would have walked out as soon as he asked for a $1000 deposit and started back looking at other dealers.
This dealer has signaled too many negatives. Give us a deposit. After the deposit we will make sure it is worth buying? No way! And then he says, buy a warranty - sure he wants the money for that too and is saying he won't stand behind what he is selling you. He knows what he has - and it has problems. He just does not want you to know that until the very last minute when he thinks you won't walk out.
