Home > Auto Loans > Help! I Just Bought a New Car, Then Was Denied for the Loan

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Ivory, one of our readers, bought a car at a dealership and drove it home. Fifteen days later, she received a letter saying that the loan had been denied. Here’s her story:

Me and my mom were approved for an auto loan on 1/27 we signed all the paperwork even got the car payment bank notes in the mail. And then I come home today (2/11) to find a letter saying we were denied for the loan. Keep in mind this is after I have had the car for 2 weeks and already signed needed contracts. Can they take my car away? Or make us pay more?

We asked automotive finance expert Matt Briggs, co-founder and CEO of CreditJeeves.com, what could be going on — and whether Ivory might actually have to return her car to the dealer.

“I would definitely have them read the contract terms, as that will dictate their options,” Briggs said. “The contract will stipulate whether it can be rescinded or rewritten. I have seen clauses which put a time limit  — say 30 days from contract date — to rewrite or rescind. Bottom line: She needs to read the small print in the contract.”

His suspicion is that the contract allowed for at least 30 days to fully approve the loan. Even though all the paperwork was signed, he said, there is a great likelihood that the contract included language allowing the lender to rescind or rewrite the loan. He emphasized that the lender, not the dealer, would be behind an overturned loan decision.

If Ivory is disappointed, so is the dealer. The dealership, like Ivory, thought it had a sale. And if she has to return a new car, the dealer will have to absorb the depreciation. So the dealer badly wants this sale to go through, too.

Briggs went on to say that while a scenario like Ivory’s is rare, it illustrates the importance of reading the loan documents (yes, even in the midst of being excited about your new ride). He said one option Ivory may have for finding financing now is a credit union. It’s also possible that the dealer can help her find a different lender, though the terms could be different from the ones she initially agreed to.

Her predicament also highlights the wisdom of a different car-shopping strategy: shopping with a loan pre-approval. With this tactic, you’ll have an idea of how much you plan to spend and how long you are willing to make payments. You’ll also want to be very careful about allowing a dealer to check your credit. Readers have told us some applications at dealerships have triggered multiple inquiries (sometimes dozens) and their credit scores have been hurt as a result. At the very least, be aware of your credit score (you can see two of your credit scores for free, with updates every 30 days, at Credit.com); the dealer shouldn’t know more about your perceived creditworthiness than you do.

And despite its length and your eagerness to get behind the wheel, read your contract — even if someone has already told you what is in it. Read the fine print, and ask questions about anything that’s unclear to you.

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  • http://www.kennethballard.com Kenneth

    Question: is the bank who sent the denial letter the same bank through which the car is actually financed?

    Finance departments at car dealerships will probably farm your information out to a few banks and finance companies to see who bites and provides the best rates. That was actually the case when I bought my first car in 2005 from Kia of Des Moines. I cannot recall who the financing actually went through, but I received a letter about a week post purchase from US Bank saying I’d been denied financing, listing the reasons why and all the other typical disclosures and statements that go along with that.

    At first, I was wondering what was going on. My father had actually bought a new minivan the same day I bought my car from the same dealership. He was financed through US Bank, while I was financed through someone else (again, can’t remember the name right now). So when he told me that, he said that they probably had a couple different banks lined up that they contact for financing — which is better than having just 1 bank lined up as you have a greater chance of financing more customers, meaning more sales — and that they may have tried US Bank first but denied me, but secured financing through someone else.

    So I hadn’t actually been denied financing completely and the car was financed. It’s just that one bank denied financing and sent a letter about it.

    I highly doubt the dealer would’ve allowed them to drive away without financing actually being secured on the car. So the first thing I’d check is that the bank on the payment tickets is the same one who sent the letter — I highly doubt it’s the same bank.

    • JakeTJ

      I had exactly the same experience as Ivory, a couple of years ago. I took the car back to the dealer, who obviously didn’t want it back, and I refused to agree to higher interest rate financing from another source. Eventually, the dealer entered into a recourse agreement with the original lender, and I left with the car; now fully paid off.

  • heavyw8t

    I bought a car in Jan of 2013 when I had HORRENDOUS credit. It took 17 inquiries before they found someone who would finance me, and when they did the rate was a ridiculous 16.99%. I knew it would be bad, but 16.99% was crazy. I fortunately had a windfall soon after that and did not have to live out that loan, paying it off after just 3 monthly payments. It got to a point where I was concerned that I would get financing at all, just like what this poster went through. By about week 3 I was very concerned that nobody would pick my loan up and I would not have a car, but the company that did the financing (at that high rate) fell into the “if you’ll pay that much interest, we’ll finance you” category.

    • banker

      If you have HORRENDOUS credit and 17 finance sources said no you should be thankful anyone would touch you. I have worked in the credit industry for thirty years and have seen and heard a lot. Most often the people complaining about high rates and lack of options are also the ones that don’t pay on time, go delinquent to the point of foreclosure or in your case repossession and then bad mouth the bank. My suggestion to someone with HORRENDOUS credit take the 16.99% pay on time for 12 months then ask to re-finance at a lower rate with the same bank. I was always willing to work with borrowers who showed the willingness to work with me.

      • heavyw8t

        I did not have the car repossessed. The original poster did. I did not bad mouth a bank. I bad mouthed myself for allowing my credit to get so bad (it involved first a job loss that prevented me from paying 4 credit card bills for 4 months and then a car accident that saw me go 93 days delinquent) and lamented that I had to accept a loan at 16.99% or not get one at all. That company finances anybody who is willing to pay 16.99% interest, much like a car insurance company will offer insurance to anybody who is willing to pay premiums that are extremely high.

      • Mike

        This is not true. I can only get high interest loans. The only thing negative on my credit score is debt ratio is hight. I don’t have late payments. But since they say that even though I can manage high debt, with a debt ratio that high, it will take your credit score from perfect down to 500’s JUST FOR DEBT RATIO.

  • morticia18042

    I had the same experience when I bought my Kia Soul in August 2014. Signed all the papers, fell in love, then a week later was told a “rebate” I’d been given had expired, so the payment I’d agreed to (all I insisted I could afford at that time) was increased $50, and I had to sign a new contract. I received loan rejection letters from no less than 6 banks. I argued long and hard with the dealer and the initial loan payment was reinstated. At this same time I read a Yahoo article from a man who had encountered this same issue, but he refused to get in touch with the bank. A few days later he left his home for work and found an empty driveway where his car had been. So, YES, the car could be repossessed.

  • Ron C

    Here’s the deal.. The Dealership did you a favor. What I mean by that is: If they didn’t let you ride out with the car the bank is going to ask why. The only answer would be that the Dealership didn’t trust you so they didn’t have a dog in the fight.. However, when they let you ride out it sends a good clear message to the bank and most of the time they can get you done.. One of the hardest jobs at any Dealership is selling a car to someone with low or bad credit… Most think they can buy any car they want if they are willing to pay for it.. It doesn’t work way. Any loan needs to be backed by Strong credit, money down and the income to pay for it.. And be realistic. If you have lower end credit and make 25K a year and can only put 1k down you’re not getting that 20k car,, What you should be looking at is a $5000 car with $1500 down and a 18 month loan term.. Pay it off and get something closer to what you want.. Yes! You’re not getting the car of your dreams but at this point it’s not only about a car. It’s about buying back some good credit

  • pcmbhelp

    I purchase a truck in Feb. My credit score was fair. I did the preloan thing and knew I was approved. Purchased signed contract and called asked to come back in paid additional $1000.00 down resigned contract and left. The dealer filed the contract and forgot to send it to the finance company. I received a letter stating the time had expired for the loan. Received numberous letter from finance companies where the dealer had applied for me a loan. Dealer phoned went back the end of March signed new contract, dealer went down on the price of the truck and admitted they filed it and did not sent it in in the time required. All of this caused credit score to go down and down. Original company decided not to accept the March application for a loan. Dealer phoned yesterday telling me he had found someelse to finance the truck. Orginal price went back up on the truck. I am so confused. We have had the truck almost four months. I have purchased tag, received all the information from Ford thanking me for purchasing the truck. I am so confused. I would like to just give them the truck back, however the dealership has sold my truck that I traded in. I do not know what to do. Any suggestions?

    • http://www.Credit.com/ Gerri Detweiler

      Have you spoken with a consumer law attorney? I would recommend you at least get a free consultation to see what they think. Visit the website of the National Association of Consumer Advocates if you need help finding one.

  • Tdizzl

    I have a question? I was approached by the financial lady at kia . I was already in a car I liked with a year left on payment .She called me and offered to see if she could get me in a newer car at a better rate than what I was paying . I said sure look into it .. she called me back saying, yep I can upgrade you at a better rate ect . So I go down to check things out and I test drive a soul .. we talk details and she says the only thing I’m worried about is a bank financing you , I don’t want you to drive away and have to take it back .. I am a self employed single mother with no cosigners .. Is why it’s hard for me to get financing in the first place . I state very clearly at this point I am perfectly happy sticking with my car if there is any chance I ‘ll end up with nothing.. so she talks to the general manager and says nope it’s good he says we can in house finance you if the banks say no … That was two weeks ago now they still have not gotten anything in place .. a bank called my work place today and talked to my coworker .. by the sounds of it he had no idea I was self employed … And she was supposed to call me today to finalize .. I’m terrified I will end up with nothing and that I’ve been extremely had by this company .. any advice would be greatly appreciated ..

    • http://www.credit.com/ Credit.com Credit Experts

      If you are already in a car you like and have misgivings about the dealership that approached you about buying a new car, why not call the dealer and say you’ve decided to stick with your current car?

      • Tdizzl

        I did not have any misgivings at first . I’ve been in the new car for two weeks .I thought I was clear about that

      • Tdizzl

        She assured me the General manager said yes to in house financing.. they took my car and gave me the new one .. I’ve been driving the new one for two weeks .. already paid the insurance and received the confirmation email .. but they have not set up the financing.. no one has taken the payment out of my bank .. I’m very worried I will end up with no car, it feels like she wasn’t being honest with me about the whole thing ..

        • http://www.credit.com/ Credit.com Credit Experts

          It is very unlikely you will lose the car. The dealer will not want to take it back — they will also want you to successfully finance it. Do you have anything in writing assuring you of the financing? It IS possible that you could be offered financing with different terms than you thought, though (as the post above explains).

  • http://www.credit.com/ Credit.com Credit Experts

    Mandi —
    What do you think would be a fair resolution? You may do better to return to the dealer with what you think is a fair way to resolve the situation and negotiate from there. But if you can shorten the narrative and focus on what you believe should happen that is fair to both parties, perhaps you can end the back-and-forth disagreements.

  • http://www.Credit.com/ Gerri Detweiler

    Generally, there is no cooling-off period for automobile sales. If in fact the dealership did engage in fraudulent activity (and simply marking up a vehicle isn’t necessarily fraud), then you may be able to cancel the sale. But you’ll need to act quickly. We would recommend you talk to your state attorney general’s office to find out what consumer protections may be available in your state. And contact the dealership immediately to see whether you can work out something with them.

  • Darin Hood

    I would want it in writing from the lender direct to me. I just read that this is a shady practice from some dealers to get a higher rate and make more on the car. They they get x amount of points to play with!

  • http://www.credit.com/ Credit.com Credit Experts

    Automotive finance expert Matt Briggs says if the dealer isn’t (yet) sweating the situation, you don’t need to either. We suspect you’ll hear something soon.

  • joe

    Does a car dealer have to take my car back after the grace period if im in a ch 13 BK and my trustee denied the loan?

    • http://www.Credit.com/ Gerri Detweiler

      I am not aware of any requirement that they do so, but you’ll want to discuss your options with your bankruptcy attorney.

  • Patrick

    I am in a similar situation. One day, I went to test drive the new redesign Beetle. I had no intention of buying… After testing drive the different models, they ask to see how much I could get for my trade in, which was an older beetle model. I owed $5k on my older beetle, they said things could work and they would give me $3k for my trade in and add $2k on my new loan. they said I couldn’t buying the car, but I could lease it. I’m like okay I think that sounds good. But I needed a cosigner. So the dealership followed me to my house at 11pm to have my father sign the papers of the new lease. About 1-2 weeks later, the financial manager at the dealer says VW didn’t approve the loan and they need more proof of income. I told him it’s just me and my dad, my mother didn’t want to have her income included. So a few days later we decided turn the lease back in. By this time, they had already posted my trade in for sale on their website and even changed the cooling system. In my head I’m like they already spent money on my trade in, how are they going to give me my car back… So later the manager says that VW approved the loan and to enjoy my new car. I was skeptical. They never told me how it was approved. It’s been since January 2014, and now September 2015. I am unable to afford my car! Am I able to seek legal action? My lease agreement is 10k miles for each 4 years and $400 a month, with an $11K residual value.

    Thank you for your input.

    • http://www.Credit.com/ Gerri Detweiler

      I am not aware of any grounds for legal action but I am not an attorney, so I’d recommend you consult a consumer protection attorney in your area to find out if you have a case.

  • Miriam Cid

    Me and my fiance purchased a vehicle

  • TD

    This has just happened to me. I went into the dealership with a pre-approved loan. The car I really wanted ended up being a bit over my pre-approved amount. The dealer says they will match my APR for the full amount of the car and I sign the paperwork and drive it off the lot. A couple of weeks later, I receive a letter from Wells Fargo saying that the loan that was applied for for me through the dealership has been denied. Can I go back to the dealership with the pre-approval I already had and pay the difference in cash? I never contacted the company I had the pre-approval through to tell them I had already gotten the car.

    • http://www.credit.com/ Credit.com Credit Experts

      It can’t hurt to try.

  • ruby robles

    Ok so my credit score is 670 I was wanted to buy a used Kia valued at 23,999 I was told by the dealer I had good credit but that I needed a cosigner to get my car so I brought my grandparents in since they have great credit the dealer said all the banks denied my application for a loan?so after all is said and done they had my grandparents get the loan of almost 26000 or 27000? Not to sure and they are registered owners?I am not in the contract?how will I ever gain better credit score if I’m not going to be able to show that I’m paying the car payment?after coming back home from tx to ca I got a letter from a credit union stated I got approved for the car loan of 21,131.25 I was like wtf.I called them to inquiry info on the letter they informed me that yes I got approved but for more $24,329 but with my grandparents income included if I try to get loan alone it might decrease?question is can I take back the Kia to dealer and sign new contract?will I be on the title?since I will be on the loan?or should I wait to refinance after 6months?car payment now is $379 bank loan will be $329 please help

    • http://www.credit.com/ Credit.com Credit Experts

      These questions should be asked of the dealer or the lender. We do not know why the banks denied your co-signed application, nor do we know who the owner is. You will have to ask the dealer whether you can return the car and sign a new contract. We’re sorry we can’t help more.

  • dave

    So here’s a question. When I got my car loan and signed the paperwork on the paperwork under the required insurance box everything was filled out N/A. I just recently got a notice that if I didn’t have a certain type of insurance then the loan company would add an additional 200$ to my loan each month and they are going to backcharge me for the months that I didn’t have their minimum required insurance. Now here’s the thing in the contract that I signed everywhere that there is mention of a certain type of insurance it says N/A. Can the company legally charge me for the months I didn’t have the insurance they wanted me to have when that specification was never in the contract to begin with? And could they charge me the extra 200$’s from here on out when in the contract that I signed I never agreed to any insurance clause?

    • http://www.Credit.com/ Gerri Detweiler

      What state do you live in?

      • dave

        Utah

      • dave

        Can’t say evidently

        • http://www.Credit.com/ Gerri Detweiler

          Dave – It’s going to take me a little while to track down some information.

          • dave

            Yeah sorry for the evident anonymity it’s hard to give information on a moderated forum. But know that I’ve been trying to find where they believe they had me agree to the insurance clause. First they said it was in the contract but it’s not. Then they said it was in the insurance disclosure but it’s not. then they said it was State law and it’s not, and finally they said it was in their bylaws as a credit union and I looked through the mebership and account agreement and there is no mention at all about this insurance requirement

          • http://www.Credit.com/ Gerri Detweiler

            Dave – I will email you.

  • Jasmine antwine

    I have a question! I “purchased” a car on 8/12. The loan had been denied trough my bank so he tried to go through 4 more banks. 3 weeks later I got denied by all of them. The loan officer called me and was saying I was approved and I didn’t have to return the car cause that’s what I was gonna do. But….as the officer and I were talking he said “we’re trying to get you approved”. But I thought you just said I was approved?! I hadn’t even received my payment package yet, the only thing I’ve received is the title to the car. So today, 9/12 I surrendered the car and gave them everything that came with the car. They have been texting and calling me telling me to come and get the car because it was mine. They’ve been saying that it’ll mess up my credit (I don’t have any, I’m only 20) and saying that it would mess up my moms credit. If they have been telling me that I have been approved then why did I get 4 notices in the mail? Please help me. I’m so stressed

    • http://www.Credit.com/ Gerri Detweiler

      I am sure this is really scary for you. I don’t have a definitive answer as your rights depend on all the facts and circumstances. If your mom cosigned on the loan, then you definitely want to let her know what’s going on so she can get involved. (If she didn’t cosign then we see no reason why it would affect her credit.)

      You may want to try to talk with your state attorney general’s office, but your best bet would be to have a consumer protection attorney review the situation for you. I know it will cost some money and it’s probably a stretch for you but it could be better than the thousands of dollars they may try to charge you if you simply returned the vehicle. (Cards and trucks lose value the moment they are driven off the lot.) You may be eligible for help from Legal Aid so you could start there. If not, you can try to find an attorney through the website of the National Association of Consumer Advocates.

  • rohini krishna

    I am stuck in a similar situation. Just bought a new Honda CRV on Aug 31st and on Sep 11th received a call from Honda saying my loan application has been denied and was presented with two options – 1) get the loan only for 2 years as opposed to 66 months as signed in the original contract (much higher monthly installment) or 2) Lease the car from them and buy it out later.
    I dont want to go with either of the options and would want to cancel the contract but they are now telling me that they are talking with the senior management and it may be approved.
    I have a bad feeling about this whole scenario and do not want to continue doing business with them. Please advice.

    • http://www.credit.com/ Credit.com Credit Experts

      Could you get financing on your own (say, from a credit union)? It is possible to refinance a vehicle, and that may be your best bet if you have concerns. Here’s more:
      Can You Refinance a Car?

      • rohini krishna

        Thanks for your response. I am planning to get financing on my own, however i do not want to keep this car with me anymore. I dont want to be dealing with Honda in future. Is there a way that i can exit this contract (which technically per my understanding is void since it clearly stated that “the contract is contingent upon the loan application getting approved”)?
        The stress they have caused me in last few days is not something i deserved while buying a new car!

        • http://www.Credit.com/ Gerri Detweiler

          We are going to have to recommend you talk with a consumer protection attorney. As much as we’d like to help, this is no doubt a large amount of money and you need legal advice. A consumer protection attorney in your area should be able to advise you. if you need help finding one, visit the website of the National Association of Consumer Advocates.

  • http://www.credit.com/ Credit.com Credit Experts

    Martha —
    Replying to you by email.

  • Albert J Brignac Jr.

    On August 24th we bought a program car with $500 down. Contract was signed and they let us take the car but paperwork was on hold for the bank because they needed one piece of paper from me. In the meantime the company I work for the contract fell through and I along with 43 others lost our jobs. When the bank called for my employer for approval they said I do not work there anymore now the dealership wants the car back. We did not sign the borrowers paper. We do not want to give the car back being it is the only vehicle we have so should I go ahead and make a payment and would that help us

    • http://www.credit.com/ Credit.com Credit Experts

      Making a payment is unlikely to result in a loan approval. But if you are able to make the payments despite the job loss, do you think you can get an approval elsewhere? Do you have additional income streams that might be considered?

  • Car shock

    Bought a car for $11,000 used car dealer called me said my load didn’t go through so they had to lower the price to $10,000 but my monthly payment is $40 more and I have 54 months instead of 60 months. I do end up paying less and the loan is through Wells Fargo so it’s a known financial institution but it’s $40 more than what I wanted as a monthly payment and I don’t know it just feels weird to me. Is there anything fishy going on and at this point can I just give them back the car and get my $300 down payment back in full. On the Deposit and forfeiture agreement it states N/ of this deposit wi non-refundable and will not be returned under any circumstances. What is N/

    • http://www.Credit.com/ Gerri Detweiler

      You’d probably have to consult an attorney to review the contract to see if there are any irregularities. (I assume N/ is for N/A…) Cars aren’t usually returnable because they depreciate. At a minimum you’ll want to at least file a complaint with the CFPB.

  • Dorothy Kulhawik

    Orange Buick put 3 vehicles ( 2 new trucks) 1 2006 car in my name! I am retired on pension of $1,200 a month! I don’t live in Florida, never have! Have me down as buyer and co-buyer! Don’t have money for attorneys! So stressed out! Wrote to several people in Florida! Att General, bbb, etc, nobody can help because I live in Michigan. Was supposed to have signed as co buyer for 1 truck! You can see on signatures that been copied over! Can’t understand how banks and car dealerships can do this to me. Never received contracts until found out one truck was reposed! Then they refused to send me copies! Had to get copies from banks! 2 different banks! 3 vehicles in 3 days! Finally after calling several times got them from dealership! Been a nightmare!

    • http://www.Credit.com/ Gerri Detweiler

      Wow, this is confusing. Did you ever go to these dealerships? Do you have the vehicles? Were these relatives who used your names? Or is it just plan identity theft?

  • Ilia

    Hello, i have question.
    I moved to the US 1.5 years ago, started to work as Software developer. I found car (2015 Chevrolet Camaro Certified pre-owned). The price is 21000 + tax+tag+insurance+. I asked for loan of $20.000. (my income is $70.000 and rent just 840$) and i don’t have anything to spend money. So, here you can see – pay loan is very easy for me, but i don’t have credit history, and would like just to start. % rate is not so important for me, i am going to pay my loan in first year. What should i do? Is that easier to get loan in dealership?
    Thank you!

    • http://www.Credit.com/ Gerri Detweiler

      My recommendation is that you find a local community bank or credit union and ask to sit down with a loan officer there before you go into a dealership.

      • Ilia

        wow! This is an amazing advice! And too fast! Thank you Gerri!
        All the best! Have a Great Day!

        • http://www.Credit.com/ Gerri Detweiler

          You’re welcome. Let us know what happens!

  • SOCKS

    I bought well thought I did. A new truck 8/29/15 sing all the paper work finace terms even with a due date and bank. Now I am being told that bank cancled my approval. I have read my contract 3 or 4 times over and over no place does it say its a condititonal approval. They told me to call them back to day after 11 and see what they say. Mean while I have my old bank calling and asking for a payment on my trade in. If they can’t find me a bank what do I do ??? Talk to a auto fraud Lawyer ????
    Thank you

    • http://www.Credit.com/ Gerri Detweiler

      Yes, I’d suggest you call a consumer protection lawyer. If nothing else, the lawyer may be able to help you get the vehicle returned without any repercussions. But you do have to make your payment on your current loan or risk a late payment on your credit.

      If you need help finding one, visit the website of the National Association of Consumer Advocates. Let us know what happens. It sounds like a mess.

      And when you do have this figured out, you may want to file a complaint with the CFPB. Judging from stories we’ve heard like yours. it seems something should be done about this practice.

      • socks

        The finance Manager just called me back and said it still says pending now.

        So he is goin got talk with the sales manager to see what the profit was on the truck. To see if they will have to cut the price of the truck or may require and down payment now. I will not go in and pay more now. If thats what they say I will call Consumer Advocates

        • http://www.Credit.com/ Gerri Detweiler

          Do let us know what happens.

      • Adame Isaac

        we just bought a car a week ago…we sign papers saying the we were already approved….they asked for $1000down payment. .
        i gave them $300 nd a week later suppose to give them $450…a financial called me saying they need a pay stube from my wife nd the money so our loan can be approved…..
        but we dont want the car any more…
        can we still returning the car back to the dealer??….nd get our $300 back?
        they told me if they dont get those $450 nd the pay stube by tomorrow they are gone ask me to return the car nd it will be a repo……..:(

        • http://www.credit.com/ Credit.com Credit Experts

          Adam —
          Cars are usually not returnable. A repo would likely still cost you money and leave you without a car and with a bill (and damage to your credit). Is there any way you can make this work?

  • Hector

    I traded my car in and got a new car 2 days ago, I put 1500 down payment. I just looked over the contract and it says o dollars for down payment. Is it possible to get that money back? Shouldn’t they have to go by what the contracts says or do I take a loss for giving them the money and driving off? I also paid with card not cash if that helps.

    • http://www.Credit.com/ Gerri Detweiler

      Is the loan amount correct? Is it the sales price minus the downpayment? Then I’d suspect there isn’t a problem. But if they didn’t credit you for a down payment you made then that would be a different story. I am not an attorney, though, so if you decide to pursue this you’d need to have an attorney look over the contract for you.

  • Kimber

    My son traded his truck in and paid cash down, totaling $6000.00 for an SUV in
    April of this year. Two months later he finds out from the dealership that NO finance companies would finance the vehicle because it’s a Lemon. After 6 months of no luck with financing, the dealership asked him to return the SUV. My son agreed to return the SUV and they steered him into buying a brand new vehicle. The problem is the dealership’s finance manager stated that my son owed them $8000.00 for the payoff of the SUV. What payoff?! My son was reluctant and confused because he paid $6000.00 down on the SUV in April, no financing in the meantime, and HE had to pay them $8000 for a vehicle they sold to him (that was a Lemon)? That’s $1600.00 per month! They stalled him for 7 hours, until 5 minutes before closing, and told him he had no options (he was 3 hours away from home and no other transportation), so he signed the papers. What are his options?

    • http://www.Credit.com/ Gerri Detweiler

      We’d encourage your son to get legal advice here. He could certainly try complaining to the CFPB and his state attorney general’s office, but given the amount of money involved and the risk to his credit if he defaults, he needs to talk with an attorney.

  • Victor Camacho

    I Bought a use truck yesterday, wife didn’t approve of it..
    Paperwork everything sign..
    Is there anyway to return truck back and get my trade in back..?

    • http://www.Credit.com/ Gerri Detweiler

      You can try to talk to the dealer — but most auto loans do not come with a cooling off period.

  • Timothy

    Just bought my wife a 2015 jeep grand Cherokee june 2015. it went into my name. I got decent credit. how long should I wait to go buy myself a new truck? I make decent money as well

    • http://www.credit.com/ Credit.com Credit Experts

      That’s up to you. We don’t know what you mean by “decent credit.” But not everyone has the luxury of timing purchases . . . many of us have to unexpectedly replace cars, etc. The best bet is to keep your credit score high. All else being equal, you might want to wait about 6 months. But there is no hard and fast rule. Do be careful of too many inquiries. Those can really hurt. See: An Auto Loan Inquiry Dropped My Credit Score 80 Points

  • kathy

    This is the exact same thing that happened to me at the Mazda dealership. The difference is I’ve had it for 1 month got my tag registration everything insurance but yesterday they called and asked me if I would get a Toyota instead of a mazda they could finance the Toyota but they couldn’t finance the mazda. Meanwhile I thought it had already been financed. They have already paid off the bank for my other vehicle I really don’t know what to do. Please if anyone else knows what you should do let me know thanks, Kathy

  • howardhogan

    hi I just got a used car Monday and Tuesday night I believe the car lot took it from my job they saying they don’t have it and I did a police report and everything and we signed the contact and agreement can they take the car back if the information wasn’t right or if credit acceptance didn’t send them the check yet?

  • Jose Rojas

    Last week I got a call from a dealer telling me that my mom wanted to buy a truck and if I could help her get it, so I went to help her and somehow I ended up as buyer and she as co-buyer.
    Two days after we signed the contract they told me that she wasn’t approved for a loan and they wanted more money so I could get it by myself so in that case I told them that since she wasn’t approved and the truck was going to be for her, I didn’t want it, they argued that it was a contract and we could not break it, even thought I denied to sign again for another one, and also I tried to give them the truck back.
    later on they told us that she was approved already but denied to give us the names or any information of the bank that supposedly approved us.
    Today I got a couple of letters from different banks saying that we were not approved, we both have no credit at all, so in this case can I take the truck back to the dealer?

    • Jeanine Skowronski

      Hi, Jose,

      You may want to consult a consumer attorney to get this sorted out.

      Thank you,

      Jeanine

  • aquecosas

    So I got a call today as I have changed cars in the past. I see the dealership is sending and requesting a lot of loans to get this approved. If they can’t make it. They cannot force me to resign another contract right?

    • http://www.credit.com/ Credit.com Credit Experts

      They might be able to. Check the fine print on the contract you signed.

  • ifwg

    Just bought a car on Monday. I filed for chapter 13 bankruptcy four years ago, completed payment plan (my case has been closed since Oct, 21) & I am just waiting for my discharge papers. Would the dealership have hard time finding a bank that willing to finance the vehicle without discharge paper? I spoke to my attorney about it, he said my official discharge date will be Dec 3rd.

  • Ana Gallardo

    I signed a lease for my 2016 Chevy equinox 2 months ago. Yesterday they called and said I can’t get financed. I’ve already made my first lease payment. Again it’s been 2 months. Do I have any rights?

    • Jeanine Skowronski

      You may want to consult a consumer attorney about your options.

      Best,

      Jeanine

  • Lillian

    I got into something similar… did you ever got an answer about how to handle it? thank you,

  • Ellen Dunsmore

    I have been in the car business for 13 years, being a salesperson, a finance manager, and a sales manager. There are a lot of things going on here that are not explained properly, yet are very common. Let me try to help people out:

    #1-At least once a week I get a call from a frantic customer that I had sold a car to a few weeks prior. They had gotten their payment book or statement from the bank already. Yet they just opened their mail and had gotten one, if not several, decline letters from not only other banks but also from the bank they had their loan with. So obviously their question was “was I really approved? Do I have to bring the car back?”

    What people don’t realize, because their salesperson forgets to tell them, is that each bank that the dealership sends their credit application to for approval must send them a disclosure letter if they either turn them down completely, or if they don’t approve exactly what the dealership asked for. So for example, if you come in for a car and I send your application to 5 banks asking for $10,000 and 72 months, and 1 of the banks totally declines you, you will get a letter from that bank saying you were outright declined based on your credit. Then 3 of the other banks send me a counter offer for $9,500. So you will get a letter from each of these 3 banks stating that you were “declined” but may have been approved for terms other than what the dealership asked for. Finally, the bank that we actually contracted you with and who has already sent you your payment statement, well they came back with an approval for the full $10,000 I asked for, but they only gave me 60 months. So you will automatically get a “decline” letter from them as well because they didn’t approve what I initially asked for. Now I either came out and told you I got you approved but for only 60 months, so the payment was higher, and you were okay with that, so the contract you signed with that bank was for the 60 months they approved at a higher payment than I initially quoted, but you’ll still get that decline letter because I asked for 72 months and they only gave me 60. Or, you were not alright with the higher 60 month payment, so I called the bank and asked them for some help because I needed the 72 months to close the deal, the 60 month payment was too high for you. The bank analyst may cave in and give me the 72 I initially asked for, or they might counter offer 66 months. So I go back out to you and give you the 66 month payment, which you’re good with so we contract at that, or I come back out after calling the bank and say “hey, good news, I got you the original 72 months”, and we contract at that. Either way the bank you have your loan with did not initially approve what I asked for, so you’ll get a decline letter from them. It’s a federal banking law that they must send these decline disclosure letters to you, so that you know that I asked for credit on your behalf and this bank “declined” you, although it’s misleading.

    It’s very rare anymore that a dealership does paperwork and sends you home with a car on a real plate if they don’t have a solid approval. The only time I’ve had this happen is where a bank approval required proof of income, and I trusted you and believed that the income you stated on your application was correct, but you didn’t have your most recent pay stub with you. So stupidly I “spot” the car, meaning I actually do the real paperwork and put you on a real license plate, I have everything done, and you promise to bring your paystubs in to me or email it to me the next day. When you do send it your income is thousands less than you stated, and the bank nulls the approval. Then I as the dealership am completely screwed, and most people don’t realize this…IF THE DEALERSHIP DOES ALL THE PAPERWORK INCLUDING THE BUYERS ORDER, THE CONTRACT, THE STATE REGISTRATION AND TAX PAPERWORK, AND THEY LET YOU TAKE THE CAR HOME ON A REAL LICENSE PLATE, PENDING YOU SEND THEM PROOF OF INCOME, PROOF OF RESIDENCE, WHATEVER STIP THE BANK IS ASKING FOR THAT YOU DON’T HAVE WITH YOU THAT DAY, AND THE NEXT DAY YOU SEND IT BUT IT DOESN’T MATCH WHAT YOU STATED, AND THE DEALERSHIP TELLS YOU YOU HAVE TO BRING THE CAR BACK OR THAT YOU MUST RECONTRACT WITH A DIFFBANK AT A HIGHER PAYMENT BECAUSE YOUR STIPS DIDN’T MATCH WHAT YOU SAID, THAT’S TOUGH LUCK FOR THE DEALERSHIP!!! YOU DO NOT LEGALLY HAVE TO BRING THE CAR BACK, IT’S YOURS!!!

    If this happens the dealership must either take you to court, or do the financing”in-house”, meaning you’ll pay them directly. But you do not legally have to bring it back, which 99% of the population does not know. This is why I will put you on a dealer license plate until I get your paystubs and check them before you get your real plate or any copies of paperwork, including your temporary registration. Then you must bring it back.

    What is described happening in this article rarely happens anymore because dealerships are very good at covering their asses now, and 99.9% of the time the letter the customer gets is simply a decline disclosure letter because whatever parameters the dealer initially asked for when applying for your loan were not approved by a bank. However, 99.9% of the time, the parameters you contracted at when you left with your new car were approved before you left. If you get a payment book/monthly statement from the bank that is the same bank that is on your paperwork copies at the same payment that is printed on your contract copy, good to go.

    • Carrie K

      I have a question about that. I bought a used car on 7/11/16, signed ALL the paperwork including that buyer’s order and contract, temp reg on window, the whole 9 yards. Took it back on 7/18/16 for them to check the battery (which took 2 1/2 hours and sales guy knew I was coming and saw me in waiting room with my kids), which they replaced with NO PROBLEMS, but I’ve been getting calls or emails from finance department since 7/18 AFTER I left the dealership after being there 2 1/2 hours and they call not 10 mins after I was gone saying needed clarification on an income sheet we submitted. I have emailed everything as requested… again.. even though it’s the same stuff from when we applied for the car and the contract has the standard 10 days to cancel policy.. I got a call from a different bank today thenmy original loan & paperwork state and dealership blowing me up again. Nobody has said they want the car back yet and today is 14 days. If the new bank won’t finance us does the dealership have to & honor the contract? Nothing in there says contingent on financing approval or anything. It’s just been a headache since the first week. Can they force me to sign a new contract as far as I know the one we signed is legally binding at this point. Haven’t received payment vouchers from ANY banks to make payments that start 8/28/16 according to my paperwork.

  • Ellen Dunsmore

    Let me address another issue that is commonly brought up and that I saw asked below several times that goes hand-in-hand with the bank decline disclosure letters you are all getting and not understanding.

    When you sign a credit application at a car dealership, whether in person or online, you are allowing the dealership to not only run your credit themselves, but also allowing them to send your application to as many banks as they want to, and giving each bank they send your application to permission to also run your credit. YOU HAVE ABSOLUTELY NO RECOURSE AGAINST THE DEALERSHIP OR THE BANKS THAT HAVE RUN YOUR CREDIT IF YOU SIGN THAT CREDIT APPLICATION. READ THE FINE PRINT ON THE PHYSICAL PAPER CREDIT APPLICATION OR ON THE WEBSITE THAT CONTAINS THE ELECTRONIC CREDIT APPLICATION. IT STATES THEY HAVE THESE PERMISSIONS IF YOU SIGN IT OR IF YOU CLICK “SUBMIT” ONLINE. I PROMISE YOU IT DOES.

    Why would the dealership send you to 20 different banks if you already a preapproval from your own bank, or from the finance company you had your last loan with, like Ford Motor Credit or your credit union? Well that answer is simple. It’s because they are trying to make as much money as they possibly can!!!!

    If you come in to my dealership and tell me that you have a preapproval from your own bank at 3.99% for up to 72 months, that’s great but I don’t really care. I’ll ignore this until after I get you to say yes to buying the car. Now after I give you the worst case scenario on payment, which would be using your bank’s approval at 3.99% for 72 months, and you say yes, you want to buy the car, I’m going to ask you what your credit is like on a scale of 1 to 10. I get no money (flat or reserve payment) if you finance with your own bank. I also have much less of a chance of selling you product like extended warranties, GAP insurance, etc. if you use your own bank, because you’re going to bring me a check in for the exact amount of the car with taxes and tags. If you finance with one of my banks, I can quote payments with the products financed into the total amount.

    So if you have 3.99% for 72 months from your bank, and your credit is good, I know just by what I’m getting for 72 months currently that I can beat your bank’s rate. So I ask you for a credit application to see if I can save you some money. It is true that I have “dealer rates” because i send the banks business, and my rates often beet employee rates for people that work at banks. That’s true, and I will use that to my advantage. So I’ll tell you that I have “dealer rates”, and that I think I can save you some money on your payment and over the length of the loan…so I’ll get a credit application from you, pull your score, and if it’s good I’ll send your application to the top 3 or 4 banks I know I’m getting the lowest rates from of the year vehicle or the particular financing situation you’re in (some banks are better for certain situations than others). So let’s say you’re buying a brand new car that has no special rate from the manufacturer, like a 0% or a 0.9%. So I send your application to the 4 banks I am getting the best new car rate for 72 months from. The best “buy rate” I get for you is 1.99% for 72 months, beating your bank’s rate of 3.99% by 2 points. But I only need to beat 3.99% to make you happy, and I can hold up to 2 points on a 72 month loan with the bank I’m using….so I come back to you telling you “great news, I was able to save you 0.25% by getting you a rate of 3.74%, lowering your payment $4 a month and saving you a bunch of money over the length of your loan”. You’re thrilled and of course you go with my bank…now my “buy rate” is 1.99%, and I contracted you at 3.74%, so I held 1.79%. So the “reserve” I get from the bank is based on holding 1.79% over the term of the loan, 72 months, and based on the total amount that you financed. So if you financed $30,000, depending on how much of the reserve that particular bank gives to the dealer (called “the split”), I probably made between $1,400-$1,700 in reserve money, just by save you 0.25%.

    Now if you’re steaming mad after reading this, realize this effected you in no way except a positive way. I saved you 0.25%, which lowered your payment and saved you hundreds if not thousands of dollars over the length of your loan. And the fact of the matter is that if I as the dealer got a 1.99% buy rate, your bank that quoted you 3.99% actually bought that paper at lower than 1.99%, probably 1.25%, so they were going to make a hell of a lot more money from your loan than I did.

  • Ellen Dunsmore

    Nope. You signed the credit application, and I promise you that in the fine print on the credit application, somewhere it says that by signing you are giving the dealership permission to run your credit and send your application to as many banks as they want to, and thereby also allowing each of the banks they send your application to to also run your credit. Gotta read before you sign.

    • brittany reeves

      Ellen I have a question,My husband and I went to a dealaership (KIA) and they got us approved took our trade in we gave them a 1,000 dollars down we singed all the paperwork they transferred out tag to our new 2016 car from our old one and we get a call saying we need another 2,000 down or bring the car back and they will give us our trade in back and our 1,000 but we have had the car FOR THREE WEEKS and they just now tell us to we ddint get approved is there anything we can do about this??

  • Ellen Dunsmore

    Nope. If you signed paperwork that said they sold you the car “as-is”, with no warranty, the dealership has no obligation to help you in any way. Now, most good dealerships, especially dealerships that have a new car franchise, will help you out in some way if the car blows up in a week, because they know word of mouth is powerful. But they don’t have to help you. And most little used car dealerships will tell you too bad.

  • Ellen Dunsmore

    Most little “side of the road” used only car dealerships that sell cars with well over 100,000 miles are usually”as-is” dealerships. Believe it or not, those 30 day or 90 day lot warranties you see on some dealership’s used cars are actual warranties or insurance policies that the dealership pays for. But most of them have stipulations like “the car must have under 100,000 miles” or “the car must have an original in-service date of no more that 8 years old” to be eligible for the policy. So the cars that don’t fall within the policy guidelines that they run through the shop and seem to be solid cars they will take a chance on and sell “as-is”. Of course, anything can happen at any time with a car.

  • Ellen Dunsmore

    Just for reference, since this is a year old but this may help others, if you look at your “buyer’s order” or “purchase order” this will list the price of the car, less trade in (if applicable), plus tax, tags, fees, plus payoff, less money down, and this is the total amount that you finance. If you look at your “bank contract”, in the truth in lending box at the top, it will list the “total amount financed”, which should match what is on your “buyer’s or purchase order”, but the contract also has a box that lists what the total amount is that you will pay if you only make your minimum payment for the full term of your loan. So this amount is considerably higher than your total amount financed because it includes all of the interest you will pay if you only pay the minimum payment for the full term.

  • LivMarie96

    I bought a 2016 used Chevy from the chevy dealership on July 16th. License plates, registration, etc .. signed all the loan paperwork. I received a letter in the mail today from the dealership saying sorry they can’t sell me a car because they weren’t able to finance me. That is all it said and then had a bunch of stuff did they check my credit score- n, did they verify my income – n, etc. Nothing else specific to me or the type of car I got. This letter was dated 08/02/2016 (I signed and took my car 07/16/2016). The dealership is closed for the weekend and so is the bank that my loan apparently went through – I haven’t received a payment book in the mail yet. Should I be worried? I’m in Illinois. Has anyone ever had a letter like this and it worked out? Slightly freaking out here.

    • maximilian

      did it work out? I’m having a similar problem now

  • LivMarie96

    I bought a 2016 used Chevy from the chevy dealership on July 16th. License plates, registration, etc .. signed all the loan paperwork. I received a letter in the mail today from the dealership saying sorry they can’t sell me a car because they weren’t able to finance me. That is all it said and then had a bunch of stuff did they check my credit score- n, did they verify my income – n, etc. Nothing else specific to me or the type of car I got. This letter was dated 08/02/2016 (I signed and took my car 07/16/2016). The dealership is closed for the weekend and so is the bank that my loan apparently went through – I haven’t received a payment book in the mail yet. Should I be worried? I’m in Illinois. Has anyone ever had a letter like this and it worked out? Slightly freaking out here.

  • bronkdog

    I got a car in San Francisco about 4 months ago. at first the bank was contacting me to show proof of income. the only problem I had is I didn’t have pay stubs since i get paid cash. I showed them bank statements showing I could pay the car in full if I wanted. I told them I would make big payments if needed etc.. no world on them, I wanted to go on vacation and not worry about the car being repossess. They don’t even answer my calls..RUDE!! Anyways from what I’m hearing is that probably the bank declined me for what ever reason after approval.I remember putting a down payment for the car but can’t remember the amount it was like a thousand something. At this point I’m not calling anyone they can call me! still no word on this car.. still confused but this is weird…Free car????? I have the registration plates etc…in fact I just got notice from DMV for renewal..still haven’t made a payment on this car. GEE GOLLY…

    • Angie

      It’s not a good idea to just ignore it. If the finance company is listed as lienholder on the title, then it is most definitely not a free car. Your credit is going to take a hit and the vehicle repossessed.

  • THenextcoming..

    so you leave a dealership without a receipt for the money you put down?? DUMB

  • Angie

    Dawn, this is old but for others interested..the contract isn’t valid until all parties have signed. If he needed a co-signer than you would be required to sign before it would be considered a valid sale. Although considering they took it upon themselves to list you as the main buyer instead of the co-signer seems a bith sketchy. I’d choose another dealer.

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