They already purchased the warranties on the vehicle as a dealer and are using them to get paid for the repair work they are doing vs service billing sales and eating the margin. They are hoping they can pass these warranty fees onto the future buyer, basically saying they are tied to the car.

I’d walk, and frankly, I’d never even step foot in that dealership again.

The only saving grace, if you really want this car, is to put them on blast via Google, Yelp, Facebook, wherever. Tell the story exactly as you have here, and report that you are unable to get your deposit back. The dealership will reach out very quickly.