Car Financing Essentials: What You Should Know Before Buying Part 2
written by Credit-HQ ExpertHaste Makes Waste
One shady tactic that unscrupulous auto dealers often resort to, especially when dealing with newbie buyers, is what’s known as an “on-the-spot” delivery. In other words, it’s the scheme masked by the enthusiastic come-on, “You can drive this baby off right this minute!”
When the agent says these magic words, the buyer’s emotions take over his common sense. This means that despite not having confirmation of the loan financing from a third party, the buyer is already asked to take the car home. This happens often because many car negotiations are made after office hours, and this gives the agent reason to say that they’ll take care of filling out the rest of the forms and making the final arrangements with the bank later on. They will then ask the buyer to simply sign blank or generic forms, and then he’s free to bring the spanking new car home right then and there.
The problem with this is that after the client has left the building with the vehicle, the shady dealer would then shop the contract around to different third-party lenders, searching for one that would give him the juiciest deal in terms of commissions. More often than not, the dealer then calls up and says that the financing fell through, and to iron everything out, the buyer has to add some hundred dollars extra or even a couple of thousand to the total package.
“On-the-spot” delivery only gives the auto dealer the needed leverage to change the terms of the contract, including the contract price, interest rates, or the number of payments, without the prior consent of the buyer. This is why you, as a prospective auto buyer, should inspect the fine print that may include a “writ of rescission,” stating that you agree to pay higher rates if in case you fail to qualify for the terms that were previously agreed upon.
A grave consequence of “on-the-spot delivery” is “yo-yo selling,” which is endemic to the automobile sales industry. When the agent calls up to say that the financing could not be approved on the original terms, the alternative given is a contract that’s much less advantageous to the buyer.
In most cases, the buyer gives in to avoid any further embarrassment. But if the agent senses that the buyer is showing reluctance to agree to the new rates or refuses to return the vehicle, the unscrupulous agent or manager may then threaten with repossession of the car or even arrest.
Moreover, if a trade-in was involved, the auto dealer could say that the car had already been sold, pushing the buyer into a corner he could not get out of. The lesson here is that you should never be tempted to bring the car home on the same day. Learn to walk away, and don’t feel obligated to the car dealer, because it’s their job to make the sales pitch, whether the sale would be consummated or not. Walking away may even force the dealer to offer you better terms the next time you drop by.
Click here to see Part 3: Car Financing Essentials: What You Should Know Before Buying Part 3
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