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Bad Credit – What the Car Dealerships Don’t Want You to Know About Your Financing

If you finance your car at the dealership it may not be yours. You may have been the victim of what is termed in the industry as a “spot delivery”. What is a spot delivery? The dealership makes the decision to let you take the vehicle home and sign all the paperwork without having your loan approved by the bank.  They may not even have a good faith belief they can get you approved for the vehicle you take home.Why would they do this?

  • It takes you out of the market. You are no longer shopping for a car. They have your business so you can’t go anywhere else and buy.
  • It gives them time to send your credit application to several banks to see if they can obtain an approval.
  • They know if you take the vehicle home and show your friends and family you will be more likely to pay more down payment or a higher payment to keep it.

It’s a dirty secret of the car business. Days, weeks, months after you drive your new car home you may get a phone call asking for the following:

  • More down payment
  • A co-signer
  • Or they may say they need to get something signed, and when you get there the terms have changed and the loan is longer or the interest rate higher, raising the payment

The car dealerships rarely tell you they don’t have your loan approved. Somewhere in the endless papers you signed will be an agreement that will  contain the terms of the spot delivery. It will state that if your loan is not purchased by a bank or finance company that you agree to bring the vehicle back and may even charge you for mileage while you have the vehicle. The car dealership may say they have sold the trade in so you feel forced to sign under the new terms of the loan. The dealership may threaten to report the car stolen or that it will show as a repossession if you do not sign the new paperwork. 

If you become a victim of a spot delivery don’t fall for their scams. You do not have to sign a new contract. You are entitled to have your down payment and trade in returned to you. It will not reflect on your credit. Unfortunately most victims of spot deliveries tend to be customers with less than perfect credit. Car dealerships know they will not have as many options available to them and may prey on their desperation. 

What to watch for and how to tell if your being spot delivered:

  • They don’t give you a copy of your contract
  • You sign an agreement stating the dealership has a certain amount of time to get your loan approved (they may explain this form away as something else so read carefully)
  • You may be asked to sign blank paperwork or more than one contract

Ask lots of questions and read everything carefully. As a finance manager I have no problem explaining the complicated paperwork or when customers take extra time to look over what they are signing. Ask if your loan is approved and what bank it is approved with. Get a copy of the contract you signed.


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