topic Re: Financing denied after buying car? in Auto Loans

Financing denied after buying car?

Anonymous — Thu, 02 Mar 2017 23:37:05 GMT

Hello

I bought a new car 3 weeks ago, signed paperwork/contract, paid downpayment (traded in a car as the down) and drove home happy.

Today - 3 weeks later I got a letter in the mail saying the application for credit/financing was denied. The first payment would be due 3/31 so I thought the letter was regarding that but it wasnt. Has anyone seen this before? I havent called the dealership yet but wondering what can I do ?

thanks

Re: Financing denied after buying car?

Dalmus — Fri, 03 Mar 2017 00:10:14 GMT

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!

Re: Financing denied after buying car?

Anonymous — Fri, 03 Mar 2017 00:07:27 GMT

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.

Re: Financing denied after buying car?

Dalmus — Fri, 03 Mar 2017 00:14:43 GMT

@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!

Re: Financing denied after buying car?

Anonymous — Fri, 03 Mar 2017 00:21:31 GMT

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.

Re: Financing denied after buying car?

Dalmus — Fri, 03 Mar 2017 00:30:00 GMT

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.

Re: Financing denied after buying car?

Anonymous — Fri, 03 Mar 2017 00:37:23 GMT

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 ? !!!

Re: Financing denied after buying car?

Dalmus — Fri, 03 Mar 2017 00:43:20 GMT

@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!

Re: Financing denied after buying car?

Anonymous — Fri, 03 Mar 2017 00:50:58 GMT

I worked in car sales when I was 18 at a KIA dealership and we did stuff like this all the time. This among other reasons is why I quit.

It gets sent to underwriting and the salesperson and finance manager don't inform you it has been 'conditionally approved', and treat it and lead you to believe it's been approved. 9 times out of 10 it was approved in UW, but when it wasn't... yea.

Re: Financing denied after buying car?

pipeguy — Fri, 03 Mar 2017 03:38:01 GMT

@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

Re: Financing denied after buying car?

Loquat — Fri, 03 Mar 2017 15:08:08 GMT

Sounds like they did what dealers call a "Spot" delivery with your vehicle. They put you in the vehicle and send you out the door with hopes of the financing terms presented to you will go through with the lender. Like another poster mentioned, most times this is not an issue...other times a deal has retracted.

Sometimes when the dealer tries to get you financed with a lender and you're orignally turned down, that letter is auto generated. Even though you got the letter, the dealer may have called in after the auto turn down and got you approved. That *could* be the case in your situation...or at least I'm hoping. But no matter what, when a lender turns you down, especially in auto financing, you're going to get a letter.

You can call the dealer but I wouldn't stress too much. If the dealer didn't have you approved with a lender they'd be hounding you or knocking at your door step as they'd be on the hook for that vehicle...and we know they aren't going to stand to lose that kind of $$$. If you were indeed turned down by Ally the dealer will attempt to hang you with another lender.

Best of luck to you and please do update the post once you obtain new information.

Re: Financing denied after buying car?

JGGM — Fri, 03 Mar 2017 17:00:34 GMT

Just throwing this out there....is it possible it was automatically declined (thus creating the denial letter), but then the dealer made a call in and got it approved? Also, did you check the paper work you signed to confirm it is indeed financed thru Ally? Meaning, the salesperson may have told you Ally, but they ended up going thru "insert bank".

At at any rate, I would call the finance manager asap and get this taken care of.

Re: Financing denied after buying car?

Anonymous — Fri, 03 Mar 2017 18:19:04 GMT

I've been trying to get with finance dept all day so far. Left messages but nothing back yet

And it's actually 3-15 first payment due..

Re: Financing denied after buying car?

Anonymous — Fri, 03 Mar 2017 21:17:58 GMT

Have you called Ally and verified if you have an account or not?

I would check with the bank first. As many people have already said the dealer will blast you out to banks for approval sometimes their computers will decline you, which sends out the decline letter. Then the dealership calls the bank and provides more info and gets you approved, but the letter will still be sent cause you were denied originally.

Re: Financing denied after buying car?

Anonymous — Fri, 03 Mar 2017 21:47:45 GMT

@Anonymous wrote:
I've been trying to get with finance dept all day so far. Left messages but nothing back yet

And it's actually 3-15 first payment due..

Call the bank and see if you have an account.

Worst case is that the dealership is scrambling trying to find you financing so they don't lose the deal.

Re: Financing denied after buying car?

Anonymous — Sat, 04 Mar 2017 02:43:00 GMT

Lots of possibilities here.

The dealer shoots out your App to many banks typically and lets say they all say no. You will get a letter from every one of those lenders. The dealer will then get on the phone with a preffered lender like Ally and work with a counterpart and get an approval. That may have happened in this case and the letter is from the origional application. Having said that if you read the fine print of those documents you signed most all will say if they dealer arranged financing and that financing doesn't go through at what they agreed to in the truth in lending they will try with other lenders. If that doesn't work then you return the car and are SOL. That is why you see dealerships is super low milegage cars being sold and when you check the carfax it shows it was sold a few weeks before.

I suspect if in fact this was a denial and you didn't have any financing you would have received a call by now. I would be concerned that they will try to offer you a higher interest loan. Many years ago when I bought my first new car this happened to me, they tried to make me put more money down or raise my interest, I ended up giving them a higher down payment.

Re: Financing denied after buying car?

Anonymous — Sat, 04 Mar 2017 12:25:06 GMT

I can't believe that this could happen. At least now I know, as a newbie in car leasing, I should be aware in this kind of strategy. Keep update here your post so that we can know what happened. I could not be a big help to you, but your case is a great help for me as I am planning to lease a new car this year. Can we know who is your dealer here?

Re: Financing denied after buying car?

Anonymous — Sun, 05 Mar 2017 07:10:07 GMT

OP, don't leave us hanging, what did you find out??

Re: Financing denied after buying car?

DeeBee78 — Sun, 05 Mar 2017 08:36:16 GMT

@Anonymous wrote:
Hello
I bought a new car 3 weeks ago, signed paperwork/contract, paid downpayment (traded in a car as the down) and drove home happy.

Today - 3 weeks later I got a letter in the mail saying the application for credit/financing was denied. The first payment would be due 3/31 so I thought the letter was regarding that but it wasnt. Has anyone seen this before? I havent called the dealership yet but wondering what can I do ?
thanks

I seem to recall the window for conditional financing being 14 days. Not sure if this is a state-by-state thing or not, but you might be in the clear on this. Check the date on the letter and check your paperwork that describe s the terms of conditional financing.

Re: Financing denied after buying car?

Anonymous — Sun, 05 Mar 2017 10:44:04 GMT

I never got a call back from the finance department at the dealership, so I emailed the salesman who sold me my car. He said that the car was already funded and I should be getting paperwork from the bank (I'm going to guess Ally). Thats all he said and tomorrow (monday) I'll call Ally and ask them if I have a loan there as my first payment is coming up pretty soon (3/15).

I bought the car on 2/18 and that denial letter was dated 2/23. Its likely that what JGGM suggested 12 may have gone on. Automatic denial letter , then they call UW's and expain situation - I did put over 50% down (traded in a car).

Will find out more during the week and will keep everyone updated. Thank you all !!! Feeling a little less worried now.