My husband and I have been doing some auto shopping the last three days. Our credit is not excellent (590 last I checked) and so we knew we may hit a few snags. To make up for this. To help us we have agreed to put down a huge deposit on the car we want. We've discovered that putting down huge deposits helps you. It did for getting ourt apartment so we're hoping it did for car shopping. The most is $4,000 that we are puttng down. After checking three dealerships and receiving two auto loan denials directly from our banks, we have been approved by the dealerships (obviously). We have finally settled on a car that we think fits our needs but have hit a financial and unexpected snag ( 3rd trimester stillbirth, etc ) making it impossible for us to put down the deposit for a car at this time. It won't be until at least around two to three weeks from today when we are able to go through with our purchase.
My problem is this. We've been approved and the dealership is willing to lock us into an agreeable rate that is low provided we put down the deposit. Since we can't do it now, will the dealership provide us this rate later OR will they have to run our credit through again? I ask this because I know there is a 2-week window limit when auto shopping and I'm afraid that if we go back later when ready... they'll run us through credit wise and we'll get either a higher rate or declined period. But we WILL have the down payment, for certain. We just need to know if our chances are already hurt because we've went shopping and ran into an unexpected dead end that prevents us from putting the down payment on it.
First of all , I express my sorrow for your loss. My other half and I went through very similar circumstances in October 2010..
Moving forward, there are a couple of things you need to understand :
1.) The dealership "approved" you , however they are not the financer of the loan. It will be up to one of the banks that they work with AND the terms of the loan may/may not change.
2.) Try "googling" loan denied after delivery of car
3.) There are several factors such as : DTI (debt-to-income)(you can bo to bankrate.com and get a rough idea of your DTI b.) previous auto history loans c.) recently opened loans/cards, and general credit history and time at CURRENT employer amd of course how much $$ you are putting as down payment
4.) Be aware that dealers are hungry to sell and therefore may have their finance folks look through you reports and if they "think" you will get approved they may let you take the vehicle home and a couple/few weeks later call you and tell you that the financing "fell though"and MAY tell you that your APR is TWICE what they "said" .
5.) If you are trying to stall them to come up with the downpayment, maybe give them a small deposit and write a "promissory note" ? (ONLY IF YOU ARE100% SURE that this is the vehicle that YOU HAVE TO HAVE and that you will ABSOLUTELY have the $$ in a couple weeks.
In any event, I would HIGHLY recommend that you DO NOT take delivery of the vehicle until the loan is secured. IF the financing falls through, they MAY tell you that you have to return the vehicle and pay them as much as $50/day + mileage. This has occurred countless times, and actually JUST happened to one of my employees about 2 weeks ago.(She had a 695 auto enhanced score and put 4k down on an $18,000 car..
I do not claim to be an expert, but you asked for opinions......that was mine. Keep us posted
Thank you for your thoughts.. it has not been easy.
And thanks a bunch on your advice!
We decided to not get the vehicle at all. After some research and debate, I realized that you pointed out a number of things I feel this used auto dealership was going to scam us into. We're now going to try for a Chevy dealership who has laid it out to us thick what to expect with our credit. In our situation, it's very likely we'll end up in a long-term deal with a high APR.
I know most say just used the down payment to get a cheap car, but my husband has already been down that route before and has ended up with lemons time after time again. He wants to make sure that when he puts $3,000-4,000 down for a car that it's going to last him and not burn out within a year ... so the best way to do that is finance a used but decent quality car.
Here's hoping that the dealership understands. An update in the future.
Just a bit of an update on our situation.
We went to the Chevy dealership and recieved a much better response. The salesman was eager to work with us and very reasonable. We first came in around 6pm to check out the car. My husband already knew the cars he could fit into for his height so we didn't have to search the lot at all. We simply checked out their Chevy Impala 2011 Fleet model and gave it a spin. It was perfect. Low miles ( 30,000) and in great condition. Since it was late he told us to give him until at least tomorrow when he can call banks and work out a few things with them. He was able to get a few approvals but they were all relatively high interest. The worst we were looking at was an 18% interest rate which he said was the worst case scenario. But he said he wanted to check a few more lenders who were unfortunately closed before making the decision. We did and received a phonecall in the morning today. The rate will be around 7% APR for 72 months. That put us at 215 or something around there a month. Can't remember. With their warranty on top of it, it went up to around 317 a month. Unlike the two previous auto dealerships, this guy was able to work out a rate that was very acceptable. We decided to purchase the car with the agreement of 2,500 down. He pulled my husband's TR score which was 675. This is the score the lender looks for. I spoke to him about being denied later on and the chances of that - i.e. spot delivery - and he assured us that this was a rare case scenario for our situation. He seems very confident that everything will go through. We filled out all the paperwork and everything is done. So my husband has a car in great condition essentially new-ish and for decent payments.
But... I'm a little worried. I'm still scared that we'll stil receive a letter a month from now telling us we were declined. I hope this is not the case. I don't want to JINX myself. But I always have a tendency to worry a lot. I hope I can come back here a month from now when I make our first payment and say that the dealership was awesome.
Definitely a far cry. Having a credit card and using it wisely over the last year really helped him.
I forget the exact bank name but it was signed to a supposedly major credit union ( I think ). He showed us that it was approved on his screen and everything. We signed paperwork that showed the lender, montly payments, percentage, everything. He's aware that I'm familiar with and petrified of this being a spot delivery or yo-yo financing but has assured me that there is absolutely nothing to worry about. Not 100% because there is always that small 1% something happens. But that's only in a case if they for some reason call his job and they say he doesn't work there would it ever fall through. So here's hoping.
We pick up the car and all the remaining paperwork copies Friday. I'm going to cheer when the bank calls to talk to us about payment. Only then will I feel for certain.
I decided to check Transunion since he said that was the one with the highest score. I looked and it showed 610. But he said he got a score of 675 with Transunion and even put that on the forms. Why do I see a drastically lower score than what he saw? Is this AFTER the inquiries of shopping me to different lenders even though they should all be seen as one inquiry - auto loan? I see he checked four lenders until finally settling with Suneast FCU, the credit union that approved us. Can anyone explain why his score showed higher?
That makes sense. I got an answer elsewhere that what the lenders see is different from what the consumer sees. Their scores figure in how big of a risk are we by looking at negative accounts see and etc. I keep looking for everything to go wrong... I need to relax!
Well if it helps any , I too was pretty aprehensive as I took delivery of a brand new 2012 4runner that was around 35k on the 21st of August. I was starting to get nervous as I hadnt heard from Toyota Financial or ANYBODY. Ive only put 400 miles on it and was holding off on investing in the whole "clear bra" thing until I was SURE ! lol... I just got a letter from them on some kind of credit sharing info from Toyota Financial that just happened to have an account number on it... I logged in online and BAM there was my name and account info ! So I set up my checking account etc for online billpay.... so yup Im breathing a deep sigh of relief right now KNOWING that Im good to go Most of my aprehension was to due to the fact that I DID NOT hand them 1 cent driving away with the BRAND NEW ride for about $ 35,000 .. and I have been rebuilding for JUST 15 mos...didnt mean to "freak you out" if I did, just wanted you to be aware..... I DO remember the finance guy saying "If there was ANY question do you really think we would watch you drive away in a nearly forty thousand dollar car ?" lmao ..... I think your gonna be just fine