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Old 06-12-2013, 11:45 PM   #1
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new car financing stuff

wasn't sure how to title it lol but today i received a letter that says the financial institution was unable to approve the application requested by my dealer. The same thing happened to my sister in-law and she ended up having to return the car. Now here's where my car is at... i've had it for about three weeks and it has almost 3000 miles lol... Do you think the dealer if they end up taking it back they would say or try to do something to charge me for that?
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Old 06-13-2013, 12:24 AM   #2
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Most dealers send your app out to several different loaner(which I hate, because that means you credit score will drop from the multiple hard inquiries) but because of this you might get that type of letter from several banks that didn't approve your loan. My question to you is are you sure that it's that particular financial institution that you sign the papers for? If not, then don't worry about it
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Old 06-13-2013, 12:45 AM   #3
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Most dealers send your app out to several different loaner(which I hate, because that means you credit score will drop from the multiple hard inquiries) but because of this you might get that type of letter from several banks that didn't approve your loan. My question to you is are you sure that it's that particular financial institution that you sign the papers for? If not, then don't worry about it
I think this is not entirely correct. You have something called "grace period" where you can shop around for the best rates whether to finance a car, house, or a couch. This period is about 7 days where you can make as many credit inquiries as you humanly can without getting multiple penalties on your credit report.

(My credential: finance and risk management & insurance major, and just bought my stang)
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Old 06-13-2013, 06:06 AM   #4
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The dealer takes a risk to give you the car while they attempt to get financing. So, if it does not go through, they cannot charge you for mileage. Simply put, you will have a day or so from the time they contact you to either return the car, or obtain your own financing and pay for the car.

Sounds to me like they tried several financial institutions, as three weeks is a long time! The financial officer at the dealership surely ran a credit check on you before you left the dealership with the Mustang, and felt you could get financing.
He's most likey in some deep water with the dealership, as they now have a "used Mustang" demo to sell!
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Old 06-13-2013, 08:20 AM   #5
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I think this is not entirely correct. You have something called "grace period" where you can shop around for the best rates whether to finance a car, house, or a couch. This period is about 7 days where you can make as many credit inquiries as you humanly can without getting multiple penalties on your credit report.

(My credential: finance and risk management & insurance major, and just bought my stang)
Can you please tell the credit bureaus that. Since I watched my credit rating drop from hard inquires and it took 3 months to get it back up to close to what it was......lol
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Old 06-13-2013, 08:53 AM   #6
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If the score actually dropped due to multiple inquiries on the same credit event (car buying) you can call the bureaus to dispute. However, if it only took you three months to recover, it's more likely that you only got hit once.

Just to be safe, I'd call and find out.
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Old 06-13-2013, 09:03 AM   #7
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I'm not sure if this is entirely true, but I'm pretty sure that auto financing always pulls from the lowest of the 3 credit scores. Mortgage pulls from the middle. Perhaps if you have one bureau significantly lower than the others this could be the issue. I don't know how this would happen as mine have all been pretty close to one another (say +/- 10 points). Just a thought, maybe tan knows.
Also, I think a hard pull only hits your credit with a 1 point drop.

Lastly, the more outstanding debt that you have, AND PAY ON TIME, the better the credit score.
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Old 06-13-2013, 09:33 AM   #8
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Well this is getting exciting. I can start a whole financial management seminar here lol. It's true that the creditor will use your lowest score, or the bottom two, in ALL cases. That's why it's important not only to monitor your scores, but also monitor the reports.

About improving scores, short and sweet: good mix of debts, and the debt ratio should be below 30%. Lets say your total credit limit is $100, don't spend more than $30 on the cards. A good debt portfolio should include credit cards, maybe student loan, a car, utility (gas, tv, phone ...), and mortgage.
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Old 06-13-2013, 10:38 AM   #9
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I think there's more to the story about the sister. A car dealer is not going to turn anyone loose in a 30k+ car that is not 100% financed. The letters your getting is from the companies that had the lowest interest rate.
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Old 06-13-2013, 10:48 AM   #10
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A year or so ago when I bought my 11' (My first car I had ever financed), I was receiving letters every day from different financial institutions stating they could not offer me a loan. I must have gotten at least six and after the second one, I contacted the dealer asking why I was getting these, he said they put my credit application to pretty much every organization they can and the fastest one to accept my loan is the winner. In my situation the letters meant nothing.

On a side note, 3,000 miles in three weeks? Wowzers.
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Old 06-13-2013, 02:40 PM   #11
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You should have NEVER taken the car off of the dealership's lot, until your financing was approved! Now, the dealer can get a higher finance rate and more money on a kick back from the loan company. Don't be surprised when the dealer has this great deal for you but it's just a small increase on the percentage.

GIVE THEM THE CAR BACK AND GO FIND ANOTHER DEALER!
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Old 06-13-2013, 03:06 PM   #12
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Lol I know that's 1k miles a week
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Old 06-13-2013, 03:21 PM   #13
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You should have NEVER taken the car off of the dealership's lot, until your financing was approved! Now, the dealer can get a higher finance rate and more money on a kick back from the loan company. Don't be surprised when the dealer has this great deal for you but it's just a small increase on the percentage.

GIVE THEM THE CAR BACK AND GO FIND ANOTHER DEALER!
Well I don't think we ever found out that a approved credit application was signed yet. If he signed the approved financial agreement, he's good. He might have a slight issue if he walked out the door without signing anything...

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Lol I know that's 1k miles a week
You're pretty good at Math. I bet you didn't even need a calculator for that...
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Old 06-13-2013, 03:23 PM   #14
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Well I don't think we ever found out that a approved credit application was signed yet. If he signed the approved financial agreement, he's good. He might have a slight issue if he walked out the door without signing anything...

You're pretty good at Math. I bet you didn't even need a calculator for that...
Sorry to disappoint you but I did :/
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Old 06-13-2013, 03:25 PM   #15
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Originally Posted by NewMtang View Post
You should have NEVER taken the car off of the dealership's lot, until your financing was approved! Now, the dealer can get a higher finance rate and more money on a kick back from the loan company. Don't be surprised when the dealer has this great deal for you but it's just a small increase on the percentage.

GIVE THEM THE CAR BACK AND GO FIND ANOTHER DEALER!
I would say he can refuse it. The deal was signed when he left the dealer a few weeks ago. If the dealer cannot make that one stick, then he can simply refuse, as that was what was signed and agreed on that day. The contract must show the sale price, the payment price, the amount financed, and the amount that was agreed to be paid back, including finance charges. If it is higher today (or tomorrow), then the original contract is no longer a legal document, and the OP can refuse the new contract and walk.
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Old 06-13-2013, 04:29 PM   #16
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I would say he can refuse it. The deal was signed when he left the dealer a few weeks ago. If the dealer cannot make that one stick, then he can simply refuse, as that was what was signed and agreed on that day. The contract must show the sale price, the payment price, the amount financed, and the amount that was agreed to be paid back, including finance charges. If it is higher today (or tomorrow), then the original contract is no longer a legal document, and the OP can refuse the new contract and walk.
Agreed. Usually when this happens the dealer runs it through a bank with recourse. Meaning essentially the dealer is a co-signor. You don't want to default on this type of deal. The bank has to have the car picked up (repossessed) within 60 days for the recourse to be valid. Op should be getting word any day now where the car is financed. No worries.
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Old 06-13-2013, 07:23 PM   #17
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None of this is legal advice, and even though I did in fact previously work in car sales, each dealership may vary in it's practices... and ethics ; ).

If they let you walk off the lot with a car, and the financing had not been officially secured. It is their mistake. Now that may not mean you get to keep the car. It doesn't mean you are on the hook for compensating the depreciation. It's on them to cover any differences, but it is on you to make sure they get their car back. If you don't give it back, the police would most likely be the next step. You said it's been 3 weeks. If you had a "free" car, my dealership would have called you on an almost hourly basis. 3 weeks is a long time to only have gotten letters and no phone calls.

Now to give you some peace of mind, credit rejection letters are sent to you by EVERY financing institution that declines to finance your vehicle. When you finance a car with lets just say (risky) credit scores, you'll most likely get some yes, and some no responses from banks. All of the No's will write you a declining letter. The yes do nothing, unless you do in fact decide to take their financing terms and sign the contract with them. So just because you got a no, doesn't mean you have to give the car back. You might be just fine...

But again, you can get ahead of all of the worry by just calling your dealership.
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Old 06-14-2013, 01:34 AM   #18
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thank guys, i called the dealer and it ended up being the first financing company they tried that couldn't do it. The next one was approved and they didn't tell me i had to come in to sign new paperwork so i figure i have the same deal.

I know 3k is a lot but if you're going to buy a new car might as well enjoy it right? lol

i had also been waiting to to make the first payment making sure it's financed to start adding mods just in case something like this had happened.
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Old 06-14-2013, 05:45 AM   #19
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I'd still think you'd have to sign the paperwork from the bank or financial institution that approved you though. The first contract you signed was the dealerships contract, which is a legal binding contract, only if the financing goes through.
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Old 06-14-2013, 06:41 AM   #20
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Sounds good. Financing out of the door, now time to enjoy the horses
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Old 06-14-2013, 08:23 AM   #21
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I'd still think you'd have to sign the paperwork from the bank or financial institution that approved you though. The first contract you signed was the dealerships contract, which is a legal binding contract, only if the financing goes through.
Nope the original contract is assignable to any bank that will accept it. No resign is necessary.
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Old 06-14-2013, 08:25 AM   #22
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Nope the original contract is assignable to any bank that will accept it. No resign is necessary.
+1, you only need to sign your life away once.
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