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Went to purchase volt with pre-approved financing...

6K views 31 replies 21 participants last post by  llninja 
#1 ·
Please help me understand the dealer's sale contract. My local credit union pre-approved me for an auto loan and gave me a blank check up to $35,000. I went to a chevy dealer in SoCal after negotiating the deal--about $30,000 out the door. I was presented an installment sale contract showing Federal Truth-In-Lending Disclosures with APR, loan term, monthly payments, and finance charge that I felt were not applicable to me because I had a blank check. I walked out wanting to get some advice.

The F&I manager says it's standard that the dealership's contract show that information in the event the check from my credit union does not go through. The F&I manager also said that this is a standard contract, and I would receive a receipt showing "paid in full" for the agreed-upon out-the-door amount of the car when I sign the credit union's check to the dealership. I was told that the financing terms on the contract are just for "what-if" scenarios.

Is the F&I manager correct? Am I paranoid? Is there a different contract for buyers who pay cash or pay with pre-approved blank checks? Please advise. This is the first time I've purchased a new car from a dealership. My past experiences have been buying used with cash and leasing.
 
#2 ·
Hmmm, I really haven't heard of such a thing, but I can see a dealers point of view. Maybe do this instead. Pay them and let them wait for the check to clear. That shouldn't be more than a few days. Have them hold the car and not let anyone open it in any way. That should work for both parties.
 
#3 ·
Sounds to me like they're trying to push you into financing through them. I would not sign anything related to that financing paperwork, and I would insist that you are doing a cash sale and all of that must be removed from the sales contract before you sign.

I purchased a car that way before (financed, but NOT through the dealer) and there was absolutely NOTHING on the dealer's paperwork related to financing. They did not know it was being financed, and the sales contract just listed it as a cash sale.
 
#4 ·
I think perhaps I ran into this when I bought the Volt and the ELR. In both cases I paid by personal check. If memory serves me correctly, for the Volt at first they wanted a cashier's check in advance. then a check in advance, and then decided that a personal check on the day of purchase would be OK. For the ELR they took a personal check but kept sending me all these finance application forms. They also insisted in running a credit check. I wasn't thrilled with that because it dings your credit score but could see their point. Insisting on filling out the credit application seemed a bit much.

I don't see where the disclosure hurts anything. It's only a "what the terms would be if you financed through us" document and, since you're not financing through them, it has no effect.
 
#6 · (Edited)
Just standard procedure. Dealer is always going to try to sell you financing. Expect it. That's the guys job. I've been in exactly your shoes, a pre-approved Credit Union bank check to pay for the car. I've had it go both ways, usually they can't beat the rate, and I used the credit union check. Once they came within 0.1%, and I decided close enough, I'll do it. Another time, I was putting a lot of cash down (like $15K), and I got a 0% surprise manufacturer financing deal (after all other discounts). Your choice. Financing a car is a big hit to your credit report. Running a credit check... fact of life.
 
#7 ·
Consider this a blessing in disguise. Are you sure you want to borrow $30-35K on a car? Instead of getting a new car now and paying for the next 4 to 7 years to pay off the loan, drive a hoopty while paying yourself the car payment you would have paid, and every year or so upgrade to a better car. Eventually you'll be able to buy a new car with a big wad of cash, no financing paperwork to sign.

I used to have an 845 credit rating and now realize that it was stupid to be chasing the high credit score. My new goal is to have 0, no credit rating whatsoever, paying cash as I go. It's amazing how much money you have when you have no car payments.
 
#8 ·
Hi this is normal and called an "option Contract" for exactly the reason the F&I mgr explained....(just in case...the check is fake or doesnt clear). It is just good business because you take delivery of the car and it is the only guarantee the dealer has of getting paid.
 
#11 ·
I gave them a cheque at 9:30 in the morning. I think the salesman ran out the back door and down the street to my Credit Union who immediately certified it at the dealer's expense. No borrowing was involved. Meanwhile they were doing an incomplete dealer prep, which seemed more like a delay tactic until they had the funds in hand. I was on my way home by 11.

So it didn't apply in my case but it may have helped that I was known to them and to the CU, and that the dealer also had an account at the same branch.
 
#12 ·
Thanks for all the feedback. I was just super paranoid because of my own ignorance in never having seen a purchase contract. Seeing an interest rate, loan term, monthly payment, and total interest paid on the purchase contract when paying with a check just made me very skeptical. I was worried the dealer could do some kind of switcheroo and claim my check was invalid, and as a result, their financing terms--which are undesirable to me--would kick in automatically.

Based on the recent feedback, it appears the financing terms disclosure on the purchase contract are normal. I guess it's back to the dealership.
 
#16 ·
Check the final payment amount and number of payments carefully when you do close the deal on financing. I had a car dealer add an extra year onto the loan one time, keeping the monthly payment exactly the same so I didn't notice. When I got home with my new car (not my current 2013 Volt, a previous car) and noticed it was a 6 year loan instead of 5 I called the dealer who said "oh the computer always does that, come back tomorrow and we'll give you a new 5-year loan contract". I wonder how many people didn't notice until 5 years later when they discovered they had an extra year of car payments?

I paid cash for my Volt, having saved up the money over a couple of good years. It was funny to see the salesman's face after he asked how I was going to finance it. You would think he had never seen anyone pay cash before.

This was the first time I had paid for a new car with cash. It was somewhat anticlimactic, hand over the check, take the keys and drive away. That's it? I guess I should have been screaming "I'M DEBT FREEEEEEE" all the way home.
 
#28 ·
If you use a check, you will have to fill out at least their minimal credit application and get a credit check. This is because they need a way to track you down financially should the cash bounce. Don't worry about it.
 
#31 ·
So I get and totally 100% agree with leaving below your means and not over extending your budget just because the credit is there. However, I still don't get your hate toward maintaining a great score (which you've already worked hard to get to). The mortgage would be the only thing really hanging over your head. Otherwise you probably could downsize to a handful of cards (think four or less total between you and your wife) and keep those balances at zero by the end of the month. Heck, even get yourself a nice hotel rewards card that gives you a free night every year. You might pay $85/year fee but if you plan a head and pick the right card you might get a $125 to $150 room for free once a year, worth it in the end if you travel just one weekend a year. Gain some extra points and depending on your spend maybe as often as every year redeem them, or maybe wait every four or five years if they don't build up fast. That way you're maintaining your credit history (and not going off the deep end like some crazy person, which lets be honest, that's how the banks will see you if your credit history just drastically stops existing), gaining some points, and still not paying any interest.

The car makes sense if you can afford it AND if it pays to do so. If you can score 0.9% interest or something and can make a higher rate of return if you keep that money invested then maybe it's worth taking the finance deal, knowing if you see your investment trending downward you can cash out and pay the loan off in full to minimize being "screwed" on any loan interest. Or like I said, keep an eye out for 0% interest deals and make use of that just to maintain the history and again keep more in the bank or investment funds gaining at least some interest.

It just seems unwise to let your credit history start to vanish in today's world. So many things are based on your credit and just the history of seeing on time payments. I know you might think you'll always be able to just save up a huge bundle of cash to pay stuff off, but that isn't always the smartest (best use of the money) or easiest. Another house some day, a time share if that suddenly became something you wanted, a zero interest loan for a car just because it's too good to pass up and doesn't cost you more, some every day services like cell phone plans and stuff... just seems like you would want to maintain being in the "system" and keep at least a couple things reporting A-OK status every month.

(Edit: And I'm more saying this to cause other people to at least think about it rather then only see the points you're making. I'm sure there are a lot of younger folks out there that just don't understand it all and I don't want them to get blinded with living as a cash only kinda person and maybe even going as far as not having a bank account. [Trust me, I've had friends that were "scared" if they didn't know where their money was; in their wallets. It hasn't worked out for them well when they've actually had to do full on grown up stuff like housing, cars, etc] The big points is even if you HAVE credit, don't use it as CREDIT. Treat it like cash, if you don't have the money on your/saved up, don't spend it. But make use of the tools to maximize your benefit!)
 
#32 ·
I already get $500 per year in rebates for GM and about $300-400 per year on my Barclaycard for apple and iTunes rewards. So paying $85 for an airlines card co collect $150 seems silly to me.

Yes, the math works with borrowing at a low interest rate and having the money invested to earn more, but what that formula doesn't take into account is risk. Owing $30-80K on a car is much riskier than owing nothing. Case in point, my company announced a site closure which caused many to panic and take the first job that came along. Since I have no car payments, I could be patient and look for the rich next gig without risk of losing my car, even if I were to be unemployed for a year or so. There's a lot of peace with that.

I've said before, I have no intention of ever borrowing money, even at 0%, because the 0% usually means you don't get other incentives that the dealership has available that aren't compatible with the 0% interest. 0% interest is just a gimmick to get buyers in the door and convince them to get a new car when they really shouldn't or can't afford it.

Don't get me started on time shares. Those are a complete rip off. Don't buy one. Period.

I have no intention of ever borrowing money again. If I want to buy a second house, I'll save the cash for it, and won't be using credit to buy it. The bottom line is in my signature. If you don't have the money, don't buy it. Credit cards and financing are ways to buy things before you can afford it. And in exchange for that shiny new car you can't afford, people's savings are gone, their kids college funds are empty, and they are on the path to a retirement on the also diet. It's far too easy to lease or borrow for a car.
 
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