QuestionQUESTION: I bought a 2002 Tahoe last Tuesday. It has now been a week and the dealership is contacting me telling me they can't find financing for it and that I need to come in to fill out new financing paperwork. I already have the Tahoe, I've been driving it for a week. Is this unusual that I have the vehicle, even though it has not been financed? I have a credit score of 760, however, because I pay cash for most things I don't have a huge credit history. Are they going to expect that I sign a new contract possibly stating the interest rate will be higher? If they do, what are my options? I don't know what to expect when I go back in there. Why would I need to fill out more paperwork?
ANSWER: The dealership did what is known as a "spot" delivery. This is a common practice when the customer has a high credit score and the finance manager assumes that financing shouldn't be a problem. First what bank is the contract with? Did you have a down payment? If so how did you make it check, cash, debit etc.? You do have options here and the dealer knows it. That is why they are trying to get you back in to sign a new contract. It doesn't mean that the rate is going up, it might just be that the bank is different than the one you signed with. Do you have a copy of the contract? What you have is a contract with the dealer right now, the bank then buys the contract from the dealer for the "amount to finance" on the contract. In Michigan you can hold the dealer to the terms of the contract if both you and they signed it and you have a copy to prove it. If they tell you that they can't find financing for you there is no reason to fill out more paperwork as most banks all use the same credit application and that is all that is needed to apply for a loan. Bottom line, you have a contract with the dealer. If the dealer can't sell it to a bank is the issue. If the tables were turned and you wanted to bring the Tahoe back they would say "Sorry you signed a contract" which is what you need to tell them. Let me know how this goes for you. By the way this is not legal advise. I am just letting you know what I know to be true in Michigan. Thanks for the question, Shane
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QUESTION: I looked through my paperwork for the banks name to give to my auto insurance company. I didn't see any name on the paperwork. I put 2000.00 down in the form of cash. I have all the paperwork I signed, including finance paperwork which I was already unhappy about the rate. I am looking for financing otherwise, I am going to contact my own bank (and I think they will not allow a vehicle to have more than 80k) So, I don't even think that will work. In order to get financed I may need to spend more, and get a vehicle with less miles it sounds like. I feel like I agreed to what I agreed to and nothing more. I'm not willing to pay a higher percentage rate. I have a 760 score, I own my home and a business. It's ridiculous. Don't you think? Can they make money off giving me a higher percentage rate? Is this truely out of their hands or what is in it for them?
ANSWER: Ok, there is no name on the contract which means they are going to "assign"(sell)the contract to "a" bank they just don't know who yet. If they accepted your down payment and signed all of the paperwork than you have a valid contract with the dealer. This means that the dealer is your bank and you will make all of your payments at the "agreed to"(see your contract)rate to the dealer until they can sell your contract. You have the dealer over a barrel here. What they did was promise you terms that they cannot get, but you have these terms from them in writing on your contract. Dealers sell contract to banks everyday. That is how we get paid from the bank. How this works is, The dealer submits an application to the bank on behalf of Joe Customer, if the bank approves Joe Customer the dealer than writes the loan, Joe takes his car home and the dealer sells the loan to the bank that approved it. The bank pays the dealer for the amount to finance on the contract plus any "rate spread" that the dealer added. If the bank said they would buy the loan at 8 percent and the dealer wrote it at 10 percent, the dealer gets to keep up to 75% of the difference between 8 and 10 percent. In your case you have the upper hand here, but be careful how you handle this because if they haven't processed the title yet they can hold that and then you will be making payments on a vehicle that you don't own. I am sure that this sounds confusing so let me know if I lost you somewhere. Thanks, Shane
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QUESTION: I think I understand. I don't know what the best thing to do is. Is there anything you suggest in this situation? I talked to my bank and they can finance it for me for 6.5% and I agreed to 10% before. So, that's much better. Should I even deal with these guys any more? I'm being raked over the coals.
AnswerIf you can get that with your bank,do it.The dealer is scrambling, they got nothing. It might even be worth asking if they will sweeten the deal if you bring in cash. They may say no but hey give it a shot. Get rid of these guys,they are jerking you around. They are not being straight with you. When you go back into the dealership leave the Tahoe at home if you can. I have heard of some dealership even trying to take a car back cause they have it sold for more to someone else! I'm not saying this is the case but just be careful, there are a lot of bad dealers out there. Good Luck. Shane
