Did you go with Dealer financing? Is this a major car dealer, or a corner used car lot? Do you have borderline credit? Did the letter come from the Dealer or from a bank?
Does your paperwork contain your truth-in-lending disclosure, itemizing your payments and total interest cost?
There is a very good chance the dealer is scamming you. You got a loan you consider good, they let you drive off the lot hoping you get so used to the car that you don't want to give it up when, "oops! You don't qualify for those terms. Here's a new loan with higher interest."
Google "dealer Yo-Yo scams"
I really hope this isn't what happened to you, but be prepared for a big fight to get your down payment and trade in back.
You need to contact the dealer immediately, of course. If they try to talk you into signing new paperwork with worse loan terms, demand your down payment and trade-in back and walk away from the deal. If they refuse, contact a lawyer.
Give us an update after you talk to the dealer, please!
@Anonymous wrote:It was a huge high volume legit car dealer. hah not those buy here pay here deals. Brand new VW.
bank is Ally Financial.
So if its is for real, I'm out a lot then. Does the dealer request the car back? I'm hoping it isnt a fight because they are a pretty huge dealership in PA.
Dealers will tell you that the majority of sales are "conditional on financing." Which is fine. But they generally know if you're going to be "really" approved or not.
Did Ally give a reason for the denial?
I'll admit, this doesn't sound like the typical Yo Yo scam you read about online.
It'll depend on what the dealer says. If you don't have a loan, yes, the dealer will either demand you sign new paperwork for a new loan, or demand the car back. Do you have a bank you deal with directly that you can discuss loan options with? I would avoid financing through the dealer at this point, unless they present you with identicle terms from another lender.
If they present you with terms you are not happy with, then demand your trade-in and down payment back. Conditional sales work both ways!
I still find it odd that the dealer represented that the financing was solid. Brand dealers typically have automatic approval systems, and would know in a few seconds or minutes if you were approved or denied... Especially with a major national lender like Ally.
Check your paperwork for a page or line item that you signed labled Borrowed Car Agreement (BCA). That would indicate they knew you weren't actually approved.
We'll all be very interested to hear the Dealer's response and what they offer as options for you!
Again, I hope its not a scam! It could be that they honestly thought you were approved.
I will update here as I find out whats going on. Going through paperwork but no BCA - just the typical sales contract with the TIL.
bottom of the contract has "Seller assigns its interest in this contract to Ally Financial"
and then has "Assigned without recourse".
So - wondering now if I should call them or wait for them to call me before 3/31 (when the actual first payment would've been due). But shoot if theres no lender, who do I owe ? 
!!!
@Anonymous wrote:I will update here as I find out whats going on. Going through paperwork but no BCA - just the typical sales contract with the TIL.
bottom of the contract has "Seller assigns its interest in this contract to Ally Financial"
and then has "Assigned without recourse".
So - wondering now if I should call them or wait for them to call me before 3/31 (when the actual first payment would've been due). But shoot if theres no lender, who do I owe ?
I'm not sure about that verbage, so I'm not going to give advice about it one way or the other. There are some members here that were former (or are currently) finance managers that should be able to explain the situation, assuming the dealer is "innocent" in the mixup.
Personally, I'd call the dealer right away. Somebody owns the car, and its not you! You don't want to have to give back the car and then be charged rental fees or something for 6 weeks.
On the plus side, if you stick to your guns and refuse difference financing terms (the same terms from a different bank would be okay), the dealer has to eat the depcreciation on the car that you return, so they should be really motivated to keep you in the car once they know you're not stupid!
@Anonymous wrote:thank you - yes Ally gave reasons for denial:
(I messed up a few years ago and have been slowly rebuilding)
-Serious deliquency, and public record or colleciton filed (applicant)
-Lack of recent revolving account information (applicant)
-Number of accounts with delinquency (applicant)
-Time since delinquency is too recent or unknown (applicant)
-Inquiries are a key factor (applicant)
I do have 1 auto loan for past 2.5 years that is clear, never missed a payment along with just a cell phone bill (no lates) and 1 credit card with really low max limit.
You didn't post your scores, but you might try DCU as they are pretty good a picking up car loans even if your scores are not top level prime. Might be easier just to go with another lender .... which BTW will ding the dealer since they won't make any money on the financing 