Hello,

I'm in a situation right now with the car dealer I bought my 05 WRX from. I received a call last week from the financing department, telling me that my APR I signed on the contract said that it is not approved. It had to be bumped up to a 7.99% (I was approved for 6.99%).

Is this a legit situation where a dealer can tell you that you didn't get approved for the APR you dealed with? Are they scamming me?

To me, it's a very deceptive way of doing business. I read the contract and there's an area stating that the seller may not change anything in financing terms unless I agree with it in writing. I asked them the reasons why I couldn't get the approval but they couldn't give me a clear answer.

Help, if you can... Thanks!

 

whatever you sign technically is a binding agreement...
whatever the reason may be... sometimes a dealer makes a mistake in quoting an interest rate from their banks... if your credit score places you in a category of "higher risk" (or 1st time buyer etc.) that explains the higher rate than quoted...

double check the laws in your area- but in my experience i have had to bring cars back to our store for that reason... basically what it is.. is bad management... they should have tried to "close you" on the rate which is safer one to quote.

when i close a deal using our rates(through our banks) i always explain to my customers that this is the proposed rate(and may/may not be lower) - keep in mind that every dealer tries to make a lil profit on the interest rate- ask them what bank they are using and cross reference what the banks rates are for regular customers-

dealers are "allowed" to mark up usually 1 or 2 points above the "buy rate" from the banks...

my suggestion ask them what their buy rate is. 2nd try a credit union or try financing on your own...
if at worst return the car...say that they did not fulfill their end of the agreement..and shop somewhere else...


hope this helps a little bit---




aloha from the summit of *-^-mauna Kea-^-*

 

Thanks gdogg, I really appreciate your help!

What the dealer told me is my monthly payment will stay the same, and for them to do that is they lowered the price of the car. How much was it lowered to? I don't know. I have not seen any figures or anything from them in regards to the changes they're trying to imply.

I was very firm with my answer to them. I told them that nothing will change in the contract; what I signed, is what I signed. They've attempted twice and both times are always "Ok, thank you!" (the finance guy) then hang up. Second time was with a higher positioned person, and said the same thing before hanging up.

My point to this is if I'm really not approved to that APR I agreed on and signed on the contract, why don't they offer me some sort of proof or notice from the bank instead of just ending the phone conversation like that. Anyone would be "iffy" about the situation.

If anyone else experienced this, please input some advice!

 

Bumping the APR is a common scam. They try to talk monthy payments, and gloss over the overall price you end up paying in the end and/or extend a 2 year contract to 3.

They also try what your going through, and call you to notify you that they couldn't get you the rate, and that you'll have to come back in to sign new documents with the new rate (generally higher). Becuase you already have your car, and they'll tell you that the monthly rate is the same - a lot of people agree.

To cover your bases, do you belong to a credit union? If not, see if you can join local ones, or go to your bank and see 1) what could you qualify for 2)what would be the interest rate 3)what are the terms (2yr, 3yr, ect...) If you can be approved for a low rate, or lower then your current rate, and stay the same term- it might be worth it to switch.

gdog is right, if you go through the financing department, you'll get screwed on the rate, becuase they often up the percent for their own cut. You'll generally get a lower rate if you go looking for the loan yourself and avoid the dealer.

The situation your in sounds extremely fishy.

 

Credit unions don't always have a lower rate, but it's worth trying.
In my case, my company credit union's and my bank rates (~4.5%) were higher than what dealer offered (3.25%). From what I know, the final approval is up to the bank and it depends on your credit and other risk factors. Dealership only check your credit and process application, but the final decision is made by the bank.

 

If your payments are the same (amount and term) and you aren't being asked to put more down... then who cares? All the rate determines is who gets how much of the profit that's already in your particular sale. If you are happy with your car, and happy with your payment, I would go in and sign the altered deal. It's no money out of your pocket, it's out of the dealers. Like gdogg said, the interest rate you agree to pay and the one you actually pay to whichever bank ends up with your note (usually not the one that initially agreed to buy it when the sales manager closed your deal) are usually different. Sometimes the dealer uses some of their profit to buy back interest rate points to get you bought, sometimes they manage to get people to agree to a higher rate than they otherwise could get. The dealer then shops the contract around and gives it to the bank with the lowest bd, and the dealer pockets the difference. The bank literally writes the dealer a check for the privelege of carrying that loan!

FWIW, I used to sell cars too (Nissans and Dodge/Chrysler/Jeep) and what greg said is absolutely true. He's always been very informative and helpful around here and isn't looking to prey on innocent i-clubbers.

 

You have a few options.

1. Give the car back unless they honor the contract you signed.

2. Accept the offer of lowering the price and taking the higher interest rate
(Which can be re-financed to a lower interest rate after you build a credit history)

3. Shop for your own rate by taking your contract to a bank or CU and see what they can do.

My advice would be to take the lower price of the car now because once you buy the car the price can't be changed. The rate on the otherhand isn't locked in by any means.

 

a very good point. try checking your credit on your own.. if your score is a 700 or higher... i highly SUGGEST getting your own financing on the "price" you agreed to buy(before financing) - - - - if your score is a lil low ..like under 650 it's possible your local banks place you in a higher rate tier... in that event... i say sign the deal(grant it doing what i told you 1st..about researching)

put it this way... me and the wife bought her wrx back in 2002 w/11% interest... we had bad credit.period. i knew that was the only way(at the time) to get the car. last year i bought my STi w/4.25% int..... since then our credit has improved and with that credit we have built back up.. we just purchased our 2nd home last month.

to me ... buying a car is simply a stepping stone to something higher... a home. build your credit..enjoy the car... and finally use that to buy other things that actually go up in value....



aloha from the summit of *-^-Mauna Kea-^-*

 

Location: yes i sell hondas

:rotfl: nice gdogg, I used to sell hyundai so I know how you feel.

 

^^ shut up foo! actually i was one of the finance guys @ subaru kaneohe- our store closed town for construction... so yeah.. i am currently a vtec man



aloha from the summit of *-^-Mauna Kea-^-*

 

Make sure that they don't want more money from you.... or make your payments longer... to make the payment stay the same.
They have to get you to sign a new contract or take the car back, and they don't want to do that.. It makes it a used car then... So you can hassle on the price more now and it seems like they have already agreed to lower.. Look over your new contract carefully.. to make sure there are no hiden charges.

 

if they're really lowering the price, and not just running the payments out for longer, then there's really no harm. However, in my experience, 6.9 and 7.9 is not a logical place for a 1 point "bump" If you have credit (700+) your rate should be no higher than 5.XX. Even with a credit score in the mid 600's, they should be able to offer you 6.9. And if you don't qualify for first or second tier financing, most third tier rates are much higher than 7.9 (10+ generally).

As long as you have the car, you're in the driver's seat (literally). The dealership cannot force you to sign new paperwork once they've delivered the car to you, all they can do is take the car back, in which case they will lose much more than the $500 difference between 6.9 and 7.9 over 5 years.

 

wOw! I'm surprised of how helpful and knowledgeable you guys are. Well, I can definitely agree with what you guys are saying. I'm doing a lot of research right now, you guys are hitting the point, if not, slightly off but it helps me a lot.

Well to update on the situation... I called the dealer today and asked for figures to be faxed to me. It turned out that the dealer was telling me everything I should know from 2nd time they called me. First guy called me and made everything about the situation fishy. The 2nd call was made by the higher person in finance dept. It made a little more sense.

Anyway, the length of contract is the same, monthly payment is the same, everything else is the same except the total amount I loaned (all fees and taxes included) which is off by few hundreds (lower) to compensate the figures to stay to where it's at currently. No money out of my pocket, so I guess it's all good! At first, I thought the amount of the buy out at the end of the term will be higher, since it did have a higher APR%. Fortunately, the terms and rest of the figures are very identical that if you look at it, you'd ask yourself what the differences are.

Thank you guys! I know this will be a great help for others in the future to search for.

Oh and this deal is made with Ron Price Subaru in South San Francisco area. No comments in regards to them.