Last Saturday I went to a local new car dealership to look at used cars. I found one I liked, so I went on a test drive. I ended up deciding to buy it and made a deal I could live with. During the financing stage, everything went normally. I signed on the dotted line and off I went, happy as a clam in my new (to me) car.
Now today, I get a call from the salesman. He proceeds to tell me that they “are having trouble getting the vehicle funded”. I say BULL. I worked in a car dealership for 15 years in the service dept., so I know a little about how the sales end of it works from being around it. If there were really a problem “getting the vehicle funded” like they claim, I don’t believe they would have let the vehicle go off the lot. What it actually has to do with is that they need a verification letter from Soc. Sec. stating how much I will receive each month and the start date. But why in the world couldn’t they just ask me for that on the phone instead of lying and making up a story?
No wonder people don’t like car salesmen. :rolleyes:
I’m confused…does ‘signed on the dotted line’ mean something other then the car is yours (as far as the dealer is concerned)? In my mind that would mean that financing is all taken care of. If that’s the case, you could probably just ignore them. OTOH, I suspect what you’re saying is that all the financing isn’t quite in place yet. That they let you drive it off the lot with a few things left to do, maybe they were waiting to hear back from the (or more then one) bank. If that’s the case and you get the feeling they are going to try to re-neg the terms (down payment, longer or higher payments, higher APR, etc), you are in a great position to say “Oh, I thought everything was taken care of, if there’s a problem and you don’t think you can get me the deal we discussed I’m going to shop around a bit more before I stop in to see if anyone else can match what you promised me” They’ve got a lot of money tied up in your deal already, as well as a car with some miles on it and potentially mad ex-customer. I’d be surprised if anything changes if you play your cards right.
OTOOH, I’ve noticed things changing over the years. The last few cars I’ve bought, the individual dealer has less and less control over the actual selling price of the car and terms or the deal. They come down from Honda/Ford/Chevy etc and whatever corporate says is what goes. If you look at the deals in the newspaper for all the different dealerships (same make) in a given area even though they look different, doing the math, they all work out about the same.
I always wonder what states are those that let people drive off of the lot without paying. For cars that I’ve financed (granted, only in Michigan, Georgia, and Texas), there was no way in hell they’d let a car off the lot until the loan was actually closed.
I’ve had multiple dealers (in WI) offer to let me take a car home overnight or for the weekend to think about it when I’ve been very clearly on the fence and it’s starting to get late or they have other customers waiting. But in those cases there’s no question that the car isn’t paid for at that point.
I made the deal with the salesman and he took it to the finance manager. Fifteen minutes later, I went in to the finance managers office and signed all the pertinent forms, including the contract. I was given copies of all the forms and we all shook hands and that is when I drove off, happy as a clam.
I don’t think it’s a question of getting the funding like they told me on the phone. If it was, I KNOW they would not have let me take the car. Suffice to say, my credit rating is not even close to 800. I think that all they need is a verification letter from the local Soc. Sec. office stating start date and monthly amount. I have no problem getting the letter they want because I have nothing to hide. But why couldn’t they just ask for that?
I live in Oregon. It’s the same here as you described. All the dealers I have done business with, including the one I worked in, would never let a person take a car home for the night or weekend unless the person was a VERY well known and upstanding individual in the community. The most common reason would be insurance coverages.
I sold cars many years ago. My information may be obsolete, but what I remember fits with the situation described by the OP. The finance departments of car dealers execute loans for lenders. They send all of the paper-work to the bank or GMAC of whomever, and in the vast majority of cases the lender accepts the loan. Sometimes, the lender disagrees with the car dealer’s judgment and refuses the loan unless there is a larger down payment. Sometimes they simply ask for additional documentation to support the loan. Getting the lender to OK the loan, which often happens after the customer has left the dealership, is called getting the loan “bought”. It sounds to me like the lender asked the dealer for proof of income. I sometimes had to drive to wherever my customer was to get additional documentation the next day.
I saw this happen once, but what they did was say 'Oh, well, now that we have this additional documentation, we can’t offer you quite as good a rate, because your credit isn’t so god, so your payments will be more like $X. [subtext]Now that you’ve had a weekend to fall in love with the car and told all your friends that you bought one, don’t you think you can find the money rather than tell all your friends it was basically repossessed?"[/subtext].
If that’s the case, I think you’ll have to try the “oh well, I will shop around now” thing.
Lots of banks & credit unions offer this service to their local car dealers. The dealers are given standard forms & rules to follow. But they only do a lick & a promise on the buyer’s credit; that’s the lender’s job. Occasionally the lender kicks back the loan application, either permanently or just pending some additional info or proof.
The paperwork the buyer signed contained a clause (in teeny medium gray print on light gray background) saying actual ownership transfer was contingent on the financing going through. So right now our OP has possession, but not ownership, of the car.
Why do the dealers & lenders do this? It makes the car buying transaction easy & quick for the consumer, something which greatly increases sales for both parties. It only backfires when A) somebody’s loan can’t/won’t be approved AND B) the buyer hides the car so it can’t be repossessed. That’s pretty rare, so net net the lenders & dealers come out way ahead using this sales method.
Modern consumers are not patient and most won’t wait 3 days for loan paperwork. And it’s easier to bully them into buying if you only have to see them once; there’s no chance of them going home and the salesman’s mind control voodoo wearing off.
My wife is a banking attorney and writes & enforces a lot of those agreements between lender & dealer. As well as writing the teensy gray-on-gray the consumer signs without reading.
I have avoided this scenario by going to my bank or credit union and securing a loan before closing the deal. Basically, the loan is all underwritten and ready to sign and go as soon as I call the bank with the final number. I go back to the dealership, haggle down my last few pennies, and then call the lender to tell them the bottom line. Once I left the dealership, ran over to the bank to pick up the check (made out to ME), deposited it in my account and basically… wrote a personal check for my car. To the dealership, I paid cash. I don’t trust third parties (like a car dealership) getting involved in my credit score/financing. I cut 'em out of the process entirely and tell them up front: You don’t get to worry about financing. I will take care of that. For your purposes, I am paying cash. That reduces the negotiations to just the price of the car; maybe trade in as well. Sometimes, you do better selling your old car yourself and using that money to pay down the loan you just took out.
This. My last car purchase was in 2007 (used) and I have dang good credit (well over 750). My credit union had 4.9% apr for used car loans, which my credit easily qualified for. Just for “fun”, I let the dealer see what financing offers they could find. Called me the next day and was all, “GREAT NEWS!!! We got you a fantastic rate!”
“Oh yeah? What is it?”
“7.99%!”
“…”
This is when he then attempted to say how with michigan’s economy in the shitter (this was before the rest of y’all decided to follow our lead ;)), blah blah you won’t really find a loan better than that blahblah.
“I’ve already been approved for a 4.9% apr loan through my credit union.”
“… Oh.”
:rolleyes:
But they treat everyone as if they just fell off the turnip truck because most people will fall for it. It works a depressingly huge chunk of the time. I think part of it isn’t even lacking intelligence/common sense but the feeling of dealing with someone In Authority or someone who knows far more about this stuff than you do*.
even if you’re cynical and define “this stuff” to mean “being slimy to weasel the best deal possible”. Sure, you don’t want to get tricked, but the salesguy does this for a living; you only do it, what, once every several years?
I am shocked they would even give you the actual rate without a fight. Most prefer to just quote the monthly payment over and over again. They know many people will see “Hey, I can afford that” and not notice they might do better to put the card on their credit card.
I had a former student call me for advice about a car loan. The numbers he kept quoting me were not making sense until I finally realized they were trying to sell him a 84 month loan. You can guess my advice!
The average person buys something like 8 cars in their lifetime. A medium volume dealer sells more than that a week. There is a huge information disparity in the deal most of the time.
In CA it’s not uncommon for a dealer to let you take the car off the lot asap. Even if the loan isn’t funded - which typically takes a week or so. I think it has to do with the fact that once the car leaves the lot, you’re stuck with it. No cooling off period.
So yes, it’s not uncommon to leave the lot without knowing much more than the interest rate and the payment but not who will be the actual lien holder.
As I think about it, the last new car I bought, the only thing I had to produce to drive the car home was a valid insurance certificate. The other verifications could be brought in at a later time, including income verification.
Oh they definitely tried to do that at first! I replied, “I’m not talking monthly payments, only bottom-line price.” He tried once more (hey, I understand; that’s how they get their super-sweet commissions) and I shut him down while still being polite and not bitchy. I said, “I look over my income and expenses and loan options before I even start looking at any actual cars. I’m only going to discuss the bottom-line cost.”
Saying “we’re going to talk bottom-line” seems to be enough for most to realize the monthly payments trick* won’t work. If they don’t drop it, walk away.
It helps having a dad who was a dealership mechanic for ~30 years, a brother who worked as a mechanic through college (for engineering) and then me working as a garage tech/evening manager at a garage (during high school and first year of college), too.
I say “trick” but while I think it’s weaselly and slimy, I don’t necessarily think they’re being immoral, per se. Their job is to sell a car at the highest price they can get. It’s not like that’s a secret. If you are planning to make a pretty damn significant purchase, you really need to take the time to educate yourself in the best ways you can. Sadly, a lot of people/Americans are not financially savvy and usually feel intimidated/overwhelmed when trying to learn. This is really what allows you to get “ripped off” at a dealership. If you’re willing to talk in terms of monthly payments… Why shouldn’t the salesguy go for it?
Are you really stuck with it if the terms of the deal change? If you agree to specific financing terms and they turn around and say they’ve changed surely you can just bring the car back?
We’ve always been allowed to take it after signing a promissory note (basically saying that we’ll come up with the cash within a day or two if the bank doesn’t do so). How this would actually shake out if our financing fell through, I don’t know. We have always had our loans set up through our credit union.
If we were letting the dealer arrange the financing, I’d be stunned if they let us out until we’d signed all needed paperwork.
Dealers have an incentive to upsell the financing.
Plus I know of one situation where a person experienced identity theft as a result of letting the dealer scan his driver’s license (this was when our state’s DLs had social security numbers on them).
I let the dealer arrange financing for me for my first new car… the interest rate was usurious (18% I think) but then this was the early 80s so it wasn’t all that out of line. Still probably marked up a couple of percent; I made some prepayments, and refinanced the loan a year later for 14%.
I would, in the future, ONLY let a dealer arrange the financing if I’d done the research and they could match what I could get from my credit union. Once, the dealer insisted I talk to their finance people even though I had arranged things with the CU. The finance guy basically rolled his eyes at the sales people, and said to me “no way we can match that!”.
I had a dealership try and take a car back from me several weeks after they’d “sold” it to me. My credit was much worse back then and they couldn’t find a lender to buy my loan. Unfortunately for them, someone in their finance office screwed up and paid off my trade-in before they got the loan bought. They were so pissed that they had to work extra hard to get it approved (lowered the price a good amount to get the loan in line.)
I still drive the car eight years later, and it’s been paid off for the last three.
And they play on that - and on the average person’s innumeracy. I was more or less trying to buy a car from a Ford dealer, and he was trying to sell me a lease deal. I did some calculations in my head and told him it was a ripoff, and he was nonplussed.
Does anyone know a good reason what a car dealer does a credit check when you are paying cash? When I bought a new car last year they offered me a pretty bad rate, which I refused. After the check came back they cut the rate in half - which I still refused. They gave me some crap about needing the credit check to accept my check but since they had my drivers license info I’d think bouncing a check to a car dealer would be a fairly bad idea.
I think that all they need is a verification letter from the local Soc. Sec. office stating start date and monthly amount. I have no problem getting the letter they want because I have nothing to hide. But why couldn’t they just ask for that?