Left dealership thought I had financing

[zack7891]

Hi,

I recently bought a new car back in June and thought everything was taken care of now, almost a month later I can see new auto loan inquiries on my credit report and the dealership is calling me. I thought the deal was done, Will I have to give the car back? What are my options? 

I read the contract and it said that it's contingent on getting financing in 30 days.

[Gmood1]

Not enough information to give an accurate answer. If you're not financed. You will have to give the car back. Have you tried obtaining your own financing?

[Anonymous]

This is probably the most disingenuous part of auto financing that I absolutely despise. Dealerships, in an effort to make the buying process faster (I use the term faster loosely), will submit your paperwork to the lender and if the finance person helping you feels like there is a good chance they will get the deal funded, they will go ahead with it as if it is already done.

Occasionally, the underwriter who receives the paperwork from the dealer will look at the credit profile of the buyer and the car they are financing and they will decide they do not want to do the deal. This is when you see multiple credit inquiries (it is called shopping) from the dealer trying to get you financed somewhere else.

In short, the dealership is calling you back because the financing they thought they secured for you did not get approved by the lender and now they are trying to get you financed elsewhere. This means your previous deal is effectively dead and they will ask you to bring the vehicle back in order to do the contract again (assuming they got you financed elsewhere) with the new terms, interest rate, payment, money down, etc.

It has to be one of the most infuriating situations anyone can deal with and personally, I think it should be outlawed. Sorry you have to deal with that.

[zack7891]

No, I haven't I just got back from a deployment so I did what every person does and bought a car but now they want it back because they can't obtain the financing. I put 500 down and drove off thinking everything was great.

[zack7891]

Thank you,

If I don't want to do the new deal will I get my down payment back? I also traded in my other car so I am seriously in deep water.

[Anonymous]

If the financing doesn't work out everything will be reversed like it never happened. Your down payment will be yours again and the car you were going to trade in will also be yours again.

[Appleman]

This is known as Spot Financing

They thought they had financing, so rather than take the chance and let you cool of while they finalized the financing they sent the car with you. Be careful as there may be language in there about a per-mile charge if they cannot get you financed.

It sounds like you are military (Thanks for your service!), you may want to see if PenFed or NFCU can get you financed.

Sorry you have to go through this BS with a dealer.

[Watchmann]

Read the fine print of your contract.  You will have to return the car AND most likely you will be charged for the mileage you have put on the new car.  They can't sell it as a brand new car so they obviously want to be compensated for the wear and tear you put on the car.  It is now a used car for them.

Contingent financing can be a real issue for people who are marginal credit risks.  The dealer wants to shove the car off the lot with the expectation that they will be able to get some sort of financing for the buyer, but sometimes this does not work and they end up with having to ask for the car back.  Nobody wins in this scenario....buyer now has no car and dealer now has a used car.  One way to avoid this is to tell the dealer you won't take possession of the vehicle until the loan is funded by the lender.  Of course very few people take this route because they are all excited about driving a brand new vehicle off the lot.  Good luck.

[Anonymous]

First thank you for your service.  You have one huge advantage here, you can simply join NFCU and get financed yourself and likely save a ton in interest costs in the process.  You should also look into servicemembers protections in this situation, I don't believe they can go after you at all while your deployed.  This is one reason you want to get a preapproval from a credit union before you go shopping, having that in hand would have taken this stress away.  This does happen alot, particularly if you have a thin credit profile and negative equity in the deal which means and high loan to value ratio.  

Best way to go is get the loan through a credit union on your own, don't let the dealer try to do it, they will fill your credit report with inquires and then get you a terrible APR because they will add points to it for the "service" they have provided to you.

I had this happen about 20 years ago and made the mistake of letting them "fix" it and they added 4% to the APR, I was really naive at the time and thought they were helping me, when I called the credit union a month later on another matter they offered to refinance my car and I was shocked that I could have gotten an APR that was 50% lower had I simply called them in the first place.

[Anonymous]

I went thru this myself years ago. I got a great deal on a leftover 2007 Eclipse GT with every option and put $2000 down with a score of 670 or so I believe. This was in 2008 and the 2009 models were just showing up on the lot. I got a call about a week or 2 later from the dealership saying they needed a co signer and more money down. I said no, and just returned their car the next day and my trade in was still there. It took about 2 weeks for me to get a check back from the dealership because they had already cashed my down payment.

The reasoning from the banks was because of the debt consolidation company I went thru. I was never late on anything but when I was younger I maxed out some cards and decided to do something about it and had a company negotiate better terms and close them for me and I paid them monthly for 5 years until debt free. None of the banks would work with me at all.

It's somewhat embarrassing and annoying but honestly, 2 years later I landed up with a much better vehicle, 2009 370Z and looking back at it, the Eclipse was no where near as nice and it all worked out in the end.