Was your auto loan really approved before you left the dealer?

You should feel excitement when you purchase a vehicle. But you know that it involves some back and forth with the salesperson. Unless you pay cash for the vehicle, you will also have to deal with the financing department.

A good bit of the auto-buying experience feels like a game of tug of war, especially if you receive financing through the dealership. More than likely, you decided ahead of time how much of a down payment you could make, how much you were willing to pay a month and just how much vehicle you could afford. By the time you finished "negotiating" with everyone at the dealership, you felt satisfied and left with a vehicle and an auto loan.

Did you really leave with an approved loan?

Everything was going well, and you were enjoying your new car. Then, a few days or a couple of weeks later, you get a call from the dealership. You need to bring the car back because something went wrong. The dealer probably told you one or more of the following: 

  • They cannot get approval for your loan.
  • They need you to put more money down.
  • The lender didn't approve the entire amount of the loan.
  • The interest rate is higher than they told you when you signed the paperwork.
  • The financing fell through.
  • They need you to sign new paperwork.
  • The lender requires you to have a co-signer.
  • They forgot to have you sign some additional paperwork.
  • They will need to put you in a cheaper vehicle.

In some cases, this situation, called a "spot delivery," was an honest mistake. Someone assumed that your loan would receive approval without getting confirmation from the lender. This most often occurs at times when there are no lender offices open, such as evenings, weekends and holidays.

The "spot delivery" scam

It's possible you were the victim of a spot delivery scam. The dealership deliberately let you leave with a vehicle in an attempt to keep you from going to another dealership or not purchasing a car that day. The financing manager knew that you would not receive approval for a loan at the terms discussed, but he or she let you leave with the vehicle anyway. As long as you have a vehicle and believe you have a loan for it, you will stop looking for a car.

The dealer knew when you left that you would have to bring the vehicle back. You had time to fall in love with it, show it off to your friends and family, and get comfortable in it. When you get that call, you already have an emotional investment, and now you panic because you need a vehicle. You may feel pressured to sign a new deal for a higher interest rate and higher payments. There is even a chance that you will leave without a vehicle at all.

What do you do now?

It may put you in a temporary bind, but you can just give them the keys and walk away. You do not have to fall for their tactics to either give you worse loan terms or put you into a cheaper vehicle. If this is all a hypothetical scenario for you, it may be worth your while to get pre-approved for financing before you walk in so you know how much car you can afford and don't need to go through the dealership. In the alternative, insist on seeing the lender approval before you sign anything. As always, be prepared to walk away.

If this has happened to you, it would probably be in your best interests just to leave and start over again. If the dealership would do this to you, it would be difficult to trust anything else they say. You could also consult with an attorney with experience in auto dealer fraud to determine whether you have any legal recourse.

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