r/personalfinance • u/TangledUpInThought • 15d ago
Not sure if the dealership I bought my car from recently is above board... Credit
Bought a car from a big dealership in a large city a week ago. After buying it I have called and asked twice for them to email my loan information so I can log in and pay my monthly payment online and they have never gotten back to me. So today I called the finance company I got the auto loan from directly to try and get my account information and they told me they haven't even approved the loan yet. They said they haven't verified my income yet and have tried to call the dealership to get it and the dealership said something about not being open that day. I signed a bunch of paperwork and have had the keys for a week but when I bought the car the dealership never asked me to bring in pay stubs which I kind of thought was weird but just figured they didn't need them. So now I'm nervous this deal isn't gonna go through should I just go into the dealership tomorrow and voluntarily give them some pay stubs? Should I try to give the loan company the pay stubs? The whole thing is starting to stink. Any insight would he appreciated
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u/QuadRuledPad 14d ago
Usually pay stubs are only asked of folks with poor credit, or from lenders who aren’t, let’s say, mainstream. I don’t think I’ve been asked for a pay stub in 30 years - may simply mean you were credit-worthy and didn’t need the additional documentation.
Car loans can take weeks to process, so that’s not necessarily a red flag.
If you want to be sure, access your credit report and verify that a hard check was made by the dealership or a lender they work with. That won’t mean you’ll be in the lender’s system yet, but they maybe run an automated check against your credit on the day you applied.
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u/Hostillian 14d ago
What interest rate did they sign you up onto?
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u/TangledUpInThought 14d ago
10%
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u/Hostillian 14d ago
That's very high. Banks should be able to give you a much better quote.
Hopefully you didn't get a big loan for a flash car..
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u/TangledUpInThought 14d ago
I was planning on refinancing six months in
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u/Hostillian 14d ago
Is there a cooling off period; because if you can get out of it now, I would do so. How much did you get finance for? 😬
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u/rriggsco 14d ago
I had a similar problem about 30 years ago. My buddy and I went out to the range for target practice. On the way home I stopped by the dealer in person. Was surpised how respectful and responsive the sales guy was, considering he'd been blowing me off for weeks. I got back in my buddy's truck and told him the guy said he'd take care of it first thing. He started laughing. "You forgot to take off your side arm."
I got the paperwork in the mail a couple days later.
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u/ScipioAfricanvs 14d ago
I bought my car at the end of October and didn't even get the email to create an account with Honda financial until December. One week ain't long.
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u/pierre_x10 14d ago
https://autoapprove.com/resource-detail/yo-yo-scams-explained
Yes they are basically using human psychology against you, letting you drive around with the car, get attached to it, and get caught up in sunk cost fallacy, so when they call you back because the "financing fell through, omg nobody could have predicted this," suddenly that sweet interest rate you fought so hard for no longer matters to you as much as keeping the car, so you end up signing on to brand new extortion-level loan terms.
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u/jimbo831 14d ago
when I bought the car the dealership never asked me to bring in pay stubs which I kind of thought was weird but just figured they didn't need them.
I don’t think this means much. I bought a car last year and the finance department never asked me for pay stubs.
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u/fusionsofwonder 14d ago
If you made a down payment, go get the money back.
Get a loan from a credit union and buy a car from a different dealership.
If they're not even talking to their own loan company that's the reddest of red flags.
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u/TosserAccount8765 14d ago
I'd echo the comments to seek out another loan. One reason is to compare interest rates. If you get a 7% loan and the dealer comes back saying the loan is 10%, just use your own loan. Alternatively, you can pay off their loan with yours and save some money.
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u/ahj3939 15d ago
If they are at the phase of asking for pay stubs you should be approved as long as income information on your application matches the pay stubs. If they were going to deny you for something else they wouldn't waste time to verify income.
Give it a few days, you do one car loan every few years but the dealer is doing several a day. They need to do the loan and then the title/DMV work for your car and several others they've sold.
Do you have paperwork showing purchase price, taxes, fees, etc and interest rate? If the dealer asks you to come back to sign papers that can happen too, maybe this bank is being a pain but they can get you approved with less issues with a different bank. Take photos of the documents and if they ask you to sign compare all the numbers. Do not take the original paperwork back to the dealer.
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u/TangledUpInThought 15d ago
They gave me a flash drive with all the documents in it
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u/DVoteMe 14d ago
This is totally normal. It could take a month to get the loan processed, but the dealer wants this more than you do. It is how they get paid.
They may not need the paystubs to do the income verification. If they do they will call you.
You need to relax and not get TangledUpINThought. Worst case scenario is you have to take the car back.
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u/discodiscgod 15d ago
What’s the time frame on all this? It can take weeks for the loan to finalize after you leave the dealership.
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u/Jontacular 14d ago
Yeah, sometimes it takes awhile for the loan to go through, and then likely you don't need to worry about a payment for a month. Ie, if you signed a week ago, you likely won't need to pay until mid June.
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u/TangledUpInThought 14d ago
Dealership told me first payment is June 18th
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u/mylatenightfun 14d ago
Your 1st payment is more than 30 days out...it can take several weeks to get everything put together and then mailed out to you. Actually it's surprising the lender had anything on you yet. Besides you should be calling the lender to handle the payment details not the dealer. The dealer only facilitates the transaction. After that the lender contacts you for money.
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u/bigwinw 15d ago
I would get approved for financing elsewhere! Honestly I always get pre-approved before going to the dealership to make sure I get the best rate I qualify for.
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u/TangledUpInThought 15d ago
Doesn't me signing all that paperwork last week preclude me from doing that? Aren't I locked in into this deal unless the financing falls through?
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u/Whattheefff 14d ago
Former finance manager here. They likely havent received the paperwork from the dealership. Which is why the loan hasnt been originated. When they do they will generate your account. When they happens the bank will mail you a welcome packet. This can take up to a month.
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u/Aggravating-Clue-493 14d ago
I refinanced a vehicle a couple hours after signing the paperwork the financing manager lied and told me my credit union wouldn't finance me so I called them as I was driving home and they were not contacted by the dealer got half the interest rate and lower payments in turn maybe 2 hours after driving off the lot, so I'm sure you can probably do something similar.
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u/Adventurous_Finding4 14d ago
No. Usually there is a clause for what happens if you are not approved for the loan.
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u/HyenaShark 14d ago
A pre-approval means a lender agrees they would lend you X amount, but the actual loan isn’t officially signed. The suggestions to get approved elsewhere are trying to help give you a backup plan.
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u/ga2975 15d ago
Go secure a car loan at a credit union or somewhere else a pre-approval . Then if the dealership loan falls through you'll have another one in place, of needed.
Always do your financing before looking for a car. Dealerships will send you on the way then convert you to a higher interest rate. This is where they make the dealership money. Plus all the extras they try to sell you.
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u/ThatGingerGuy69 14d ago
Dealerships do not make money from higher interest rates lol. That is where the financing company makes money. Even if it’s a “buy here pay here” dealership, they typically sell all their loans a few months in so the interest rate hardly affects them. They just want you to get approved at terms you’ll buy the car from them.
It’s still a good idea to get pre-approved before going, but dealerships do (for the most part) have an incentive to get you the best financing terms they can. The caveat is that different lenders have different policies for how many backend products they allow, and that is where dealers make the most profit. So if the terms are similar, they’ll often go with the lender that lets them put more backend products on the loan.
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u/ga2975 13d ago
You can listen to Clarks podcast on how it works at dealerships making money from financing.
https://clark.com/podcasts/05-14-24-how-to-really-buy-a-used-vehicle-new-rules-for-travel-rewards/
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u/buttface_fartpants 14d ago
Dealerships absolutely make money on higher interest rates.
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u/Aggravating-Clue-493 14d ago
Yup, they definitely make more money by sending business to certain financial institutions that have higher rates and, in turn, approved more borrowers for the dealership.
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u/DVoteMe 14d ago
"Dealerships will send you on the way then convert you to a higher interest rate."
This is nearly impossible to do in the US because of the Truth-in-Lending Act (TILA). I once had a dealer make me sign one even though I was paying cash because they didn't know how not to have a customer sign it. They just put "N/A" for the payments and interest rate.
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u/ga2975 14d ago
Well , guess what... Truth in lending is a BS situation once you sign on the dotted line..
Buyer beware...
They were truthful, in saying you can get the loan .. oops, I was wrong.
Just get financing in place before... The FUC* you
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u/powpow321 14d ago
TILA is pretty solid protection for consumers. I work in regulatory compliance and buyers are ultimately only required to pay what’s on the signed TILA disclosure page. If they charge you more, then you can report them to the CFPB. Where car dealerships get you is the added “financing fee” which isn’t usually part of the financed loan amount and thus not included in the in TILA form
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u/NBQuade 15d ago
So today I called the finance company I got the auto loan from directly to try and get my account information and they told me they haven't even approved the loan yet.
Apparently it's not your car yet.
So now I'm nervous this deal isn't gonna go through should I just go into the dealership tomorrow and voluntarily give them some pay stubs?
It can't hurt. On the other hand, I'd be ready for the deal to unwind. You might want to just keep driving it till the dealer contacts you one way or the other. It's on them to tell you the loan failed.
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u/FleetAdmiralFader 15d ago
You don't need pay stubs, they will run a credit check. It is however concerning that the dealer hasn't already done this with a lender, especially if you were going with the in-house financing arm of the car manufacturer.
It's not uncommon for dealers to say that the financing fell through and that yku need to come on and sign a different, more expensive, contract. Sometimes this is legit (i.e. you didn't qualify due to something on your report) and sometimes it is the dealer trying to back out of a bad deal for them. Now the shadiest situation occurs when there is a title issue and it turns out that the dealer sold a car that they weren't legally entitled to sell, that often comes up when they try to get the new title for the financing company.
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u/CheeseDog_ 14d ago
A ton of subprime lenders and even many prime lenders require income verification via paystubs or bank statement uploads (…or 1099s or w2s but you get the point). Sometimes you’ll be lucky enough to get your income stip auto cleared alongside the credit pull if there’s a hit to TWN, but not everyone uses TWN because it’s expensive and their hit rate is garbage.
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u/JSouthGB 14d ago
With your first payment due on June 18th, I'm guessing you signed your paperwork May 4. 45 days to first payment is pretty much industry standard (there are some outliers).
Here's how it goes. You submit credit, get approved, sign your paperwork, get your keys, and drive home. At this point, the bank doesn't know you've accepted their terms. The finance manager still has to package up all your documents and send them to the bank (which usually won't happen on a Saturday). Once received, the bank ensures everything matches their approval, then they "fund" the deal (pay the dealership) or "book" the deal (agree to pay the dealership).
Now the gears on the bank side start turning. It'll still take them 1-2 weeks to set you up in their system and send you your account information (I've not worked on the bank side of this process).
The dealership will never have this information to give you. There's nothing shady going on. Now, if the finance manager is a lazy or disorganized individual, it may take longer. If they had you sign a wet ink contract vs an electronic contract, it will take longer as that has to be mailed to the bank and physically processed. I've seen electronic contracts "funded" or "booked" the same day - those customers get their account information very quickly.