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Howdy folks.
Since Honda is offering 0.9% for 36 months on new cars, I plan to finance via them after I negotiate the car price. I have never done a car loan before.
Now is the loan approval on the spot? Will I know 100% that my loan has been approved before I drive out? What papers should I ask them to confirm approval?
(I read somewhere about the dealer calling back after a week and stating that the loan wasn't approved, get the car back scams or accept this higher rate BS)
If you finance through the dealer they will complete a loan contract for you including terms of repayment. Horror stories of loan scamming are usually from dealers without a new car franchise or without a legitimate factory backed financing option such as Honda Finance.
Don't fear the scams, but be smart enough to read what you are signing so you know what is actually being approved. The preferred rates like 0.9% will require excellent credit, so they could bump it up if you don't qualify. You need to know if that is legitimate or not and if you are willing to pay more if they don't approve you for the lowest rate on their tier system. If you know your credit is excellent, make the 0.9% part of your offer so you can walk away if they don't approve it.
the "best" protection against loan scams ... such as "needing a larger downpayment", or changes in interest rates, terms ... after the fact is to deal with a Factory loan program such as the Honda offer.
do verify that the buyer's order/contract has the "final acceptance" by the dealership before taking possession and leaving the lot with the new car. IOW, many dealers hide behind "fine print" that the deal isn't final until an "officer of the company" signs off on it. What happens is that you've dealt entirely with the sales rep and "sales manager" who sign off on a deal, so you are lead to believe that the deal is final. But wait ... according to their contract, it's not final and that's where they come back to demand more money. At that point, if you've driven the car away, it's now devalued and they can legitimately charge you for the miles and loss in value if you attempt to unwind the deal. You need to ask and verify that the signature(s) on the paperwork are, in fact, the authorized person(s) for the dealership to finalize the deal; ask if the signers are the final decision makers about the deal. Don't accept any vague language about this ... that the "big boss" signs off on the deals that the sales department makes as a matter of formality. The "big boss" doesn't have to do so.
I've seen this little detail crop up enough times ... even at "big new car dealerships" ... that I've advised buyers to not get caught up in the moment of purchase and excitement about buying their new car. Better to not even take possession until the paperwork is absolutely finalized. If that means not taking possession and driving away with the car until all is verified, so be it. It may be well worth your time to do so.
Indeed, I've even been a cash buyer at a new car dealership and had this stunt pulled on me. Signed the paperwork, made the "out the door total cash price" deal, paid for the car, took possession and drove away. Only to have the F&I manager call me up two days later to advise that the deal "hadn't been signed off by the upper management" and they needed more money to wrap up the deal to get the "authorized executive" of the company's approval. And yes, that was what their contract fine print said was their process. I told 'em to pound sand, but they persisted and it took a brief chat with a lawyer to discover that this wasn't an unusual tactic to get you into the car and then get more money. Since I wasn't going to spend more money on the car than I'd agreed to, I returned the car for a refund. Less the per-mile fee that they charged. Since I'd put less than a hundred miles on the car and never processed the MSO paperwork for title in the two days, they reluctantly waived the depreciated value of the car since they could still sell it as a "new" vehicle.
Some of these sales tactics will be regulated by the laws of the state. But IMO, it's always best to be pro-active about such purchases and verify verify verify everything about your car purchase ... financing, price, and condition of the vehicle. I've done many a "new car" pre-buy inspection that revealed damage to a vehicle prior to it being delivered to a customer. In some cases, the damage was enough to renegotiate the deal on it or refuse to accept the car. Just because a car is coming off an MSO doesn't mean it hasn't been involved in a "test drive" or "delivery damage" incident. And I've seen this on new MB's and BMW's from "reputable" dealers, or even a Saab when they were still in biz.
Sunsprit, Thanks, but I got a little lost. You said "The buyer's order/contract has the "final acceptance" by the dealership"
So what papers should I exactly get? Is it called buyer's contract papers? And this should have the signatures of the finance guy? And the word approved in some place?
sj08054 - Have you actually applied for Honda loan before going to the dealer?
IME, financing approval is done on the spot and I haven't had to deal with any spot delivery issues.
However, it's always a good idea to get your own financing ahead of time as a backup so if/when they call you because the Honda financing fell through for whatever reason, you don't have to return the car and deal with the fallout.
Sunsprit, Thanks, but I got a little lost. You said "The buyer's order/contract has the "final acceptance" by the dealership"
So what papers should I exactly get? Is it called buyer's contract papers? And this should have the signatures of the finance guy? And the word approved in some place?
sj08054 - Have you actually applied for Honda loan before going to the dealer?
Yes.. Many years ago when I purchase a new Acura. Got pre-approval for their promotional rate online with Honda Finance Company and printed it out. Negotiated the price of the vehicle over the phone and went in to dealership confirm everything and did the paperwork. I just showed them the letter.
Sunsprit, Thanks, but I got a little lost. You said "The buyer's order/contract has the "final acceptance" by the dealership"
So what papers should I exactly get? Is it called buyer's contract papers? And this should have the signatures of the finance guy? And the word approved in some place?
Sorry, not trying to confuse the issue.
The problem is that different states have different auto dealer contract protocols for the selling and financing of the cars. I tried to generalize in a manner that reached to the core issues of "finality" of the purchase.
My concern was that you not take delivery and drive off the lot with a car unless and until every "i" is dotted and every "t" is crossed on the purchase paperwork. That includes whatever final sign-off is the procedure at the dealer you're working with.
My first-hand example of encountering the little sideshow where the sales department paperwork on a car purchase is illustrative of the problem; ie, some dealerships retain the right to "review" a deal and contact you after the fact of the deal as you understood it and contracted in good faith. They may demand a different interest rate or terms on your loan, and/or may demand a higher down payment. In some states and dealerships, they get away with this on the basis that the deal wan't "final" until accepted and approved and signed off by a company corporate executive with the exclusive power to accept the deals that the sales department and F&I dept had signed off on.
I don't know for certain what a "buyers sales order" may be called in your state. It could be "buyer's contract" or some other title to that effect. With financing involved, I'd certainly want a sign-off by the F&I department on the deal. And if you're in one of those states where the dealership retains the right to review and sign off on a deal after the fact, I'd want one of the corporate officers or dealership owner to sign off on the deal as presented and accepted by you and the sales department.
The last thing I'd want is that after the fact phone call advising that your financing or down payment wasn't accepted by the lender and the dealership needs more money to complete your purchase. So do your due diligence and put the burden on the dealership that the deal is, in fact, the deal at the time of delivery of the car.
Of course, all is predicated upon your candor with the dealer and lender. Know in advance what your credit score is so that you can verify that you qualify for a given loan program. Otherwise, you're just setting yourself up for problems if the lender decides you're in a higher risk level than you've lead a dealer to believe you qualify for (or that they're going to assume you qualify for to close a deal ... getting your signature on the bottom line for the deal and taking delivery of a car is their primary goal). The dealer will make it as easy as possible for you to walk through the deal to your signature. After the fact of what you think was the deal as you drive away happily relived that the process is complete is when the fun and games can really begin.
FWIW, we have a consumer advocate radio show in my area where these types of auto dealer sales tactics are a frequent topic. If those call-ins are a representative sample of the dealership activities, then there's a lot of these types of events going on with the dealers.
Last edited by sunsprit; 11-09-2016 at 05:28 PM..
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. But if they can give 0.9, I'll rather take that
