VW Vortex - Volkswagen Forum banner

Dealer wants to re-do used car sale for our benefit. I don't see the catch. Do you?

13K views 137 replies 54 participants last post by  Sold Over Sticker 
#1 ·
Back story: We bought a used Honda Fit on Saturday from a new car dealer, and financed $13000 at 4.99%. We took the car home that day, happy with the price paid for the car and the interest rate.

Today we get a FedEx from the dealer. The letter on the top said

"It came to my attention that we had the wrong book value when we were doing your deal, thus we charged you too much for your car! My apologies but I am correcting it with this paperwork. Please sign at the highlighted areas, you can see you are saving $1000."

Attached was the loooooooooooong multilayer form where everything is broken down as far as taxes, tags, and financing. Sure enough, the total amount financed was reduced to $12K. But the interest rate went up to 5.89%. A HA. But with the principal of the loan reduced, the monthly payments are less (by $15/month) than the deal we signed, the total finance charges are less, and the total amount we will wind up paying is reduced by about $800.

The dealer also included a prepaid FedEx envelope for us to send the revised paperwork back to them.

The length of the term hasn't changed. The finance rate isn't variable, and there isn't a balloon payment at the end. My suspicious eyes are scanning the paperwork up and down looking for the obvious catch, but I can't find one.

I've heard of dealers going back to customers saying deals have to be redone because they couldn't get the financing they thought they could when they initially sold the car, and that was my first suspicion here, that it was a scam, and we could blissfully ignore it unless and until the dealer escalated things. But I've never heard of a dealer going back to a customer out of the blue saying "we charged you too much, enjoy your savings".

So what am I missing?
 
See less See more
#4 ·
Here is my guess. Bank would not approve you at the lower rate. So they got you financed at a higher rate for a value you could afford. Dealer had to do it or have you bring the car back and face litigation.

Take to a lawyer if you know one, or write up your own contract statement about what you believe you are reading on the revised contract. > Lower finance cost, higher APR, lower total payoff amount. Have your dealer sign it and you sign it and have witnessed. That way you at least have proof of what you thought and that the dealer confirmed your thinking.
 
#9 ·
I would have to agree with this. Since the bank isn't open on Saturday's, I am guessing they got a pre approval for the 4.99 but then on Monday when someone actually looked at the file they realized that they couldn't do that amount and therefore had to find a different bank. I am kind of surprised that they didn't try and lower the price just enough to make it the same for you though.

Did they really sell it to you for $1,000 over the "book" price?
 
#5 ·
The only thing I could guess is that they get a larger kickback they get from the bank from the higher APR outweighs the money they knocked off. Seems too good to be true, but could be..

I'd play their game and tell them thanks for discovering they charged me too much. Now redo it with the original APR and your new price. :D
 
#6 ·
They are not doing this out of the goodness of their heart. If they were, the interest rate would not have changed.

They are making more money on the deal (on the finance end instead of the sale price of the car). It looks like the numbers work out in your favor, and they are hoping you will sign the new contract.

Since they claim they charged you too much, you should demand the lower selling price with the original finance rate. :laugh:
 
#8 ·
They are not doing this out of the goodness of their heart. If they were, the interest rate would not have changed.

They are making more money on the deal (on the finance end instead of the sale price of the car). It looks like the numbers work out in your favor, and they are hoping you will sign the new contract.

Since they claim they charged you too much, you should demand the lower selling price with the original finance rate. :laugh:
Demand This not a TTRS. But yes there has to be a catch in their favor. They also must be earning more on the paper (finance term for your contract financed at XX rate with XX bank). Maybe they are switching over to another lender that pays them more too (Spiff).
 
#10 ·
Sounds like yo-yo financing to me, but the drop in price is curious. I imagine they did that to blind you in order to make you more willing to sign.

Lawyer time.
 
#11 ·
They financed you at a rate you ultimately weren't approved for, they then made the car "cheaper" so the payment term you've agreed to wouldn't change. Happens all the time in used car deals because there's a lot of wiggle room in the price and these types of situations occur more often when the car is purchased on the weekend when banks aren't able to go over the details.

As has been said, review it thoroughly, but it seems as if they've came up with a solution that benefits both parties.
 
#16 ·
What Brandon said. Sounds like the FI Guy Guessed at where the rate would fall as some do on a busy Saturday and he guessed wrong. I personally do not guess, I do not loan the money so no need for me to figure out the rate. If they wanted to be shady they would have called you back and said you now needed $1,000 down to keep that car. They know you win taking $1,000 off the Car but it beats you bringing the car back and any potential bad press that may come from that. Now pay off the loan early or... Re Fi it at a lower rate to really take advantage of the $1,000 up front savings. :thumbup:
 
#17 ·
Exactly. They did the right thing in my opinion. It would be common for the call to the customer to be "The bank didn't approve you as we thought they would. We need another $1k down, and the rate jumped .9%. So sorry, but we need you in to resign tonight or we'll have to take the car back."

I personally wish they would have worded their note differently, or simply called the OP, but hey, most car dealerships can't explain anything well enough, so it figures. :laugh:
 
#18 ·
Our concern morphed from "what's the catch?" to "why didn't they mention the interest rate jump in the cover letter?" as these replies came in.

As much as I'm being cynical about this, I haven't found a way this new deal will work where we don't come out ahead. I'm mostly surprised that the dealer, knowing the rate would rise, wouldn't just cut the selling price to just enough where the payment (and total amount paid over the life of the loan) equaled what we agreed to pay on Saturday. But I'm not complaining.

In the past we have refinanced car loans with our bank when we weren't thrilled with the rate we got at the dealership. We weren't going to with this car because we didn't think we could get much better than 4.99%. But believe me we will check with our bank now!
 
#20 ·
Can you get approved for a better rate through a different lending institution and just call the dealership and have them honor their second pricing offer? Were there any special terms on the second deal? Worst case scenario you buy it on their paper and then immediately re-finance externally for a better rate.
 
#24 ·
Talk to a lawyer? That seems unnecessary.

Just read it and run the numbers yourself a few times. Make sure you are indeed saving money or at worst breaking even with what you thought.
The finance guys don't always get the loans right so when the banks come back the terms can change, these things happen.
 
#26 ·
Dealer wants to re-do used car sale for our benefit. I don't see the catch. D...

So the rate went up, the term of the loan didn't change and the price of the car went down. The result being what you owe less across the board?

Who cares? The dealer is actually being honest and re-working the deal in your favor but we still get TCL morans pulling the lawyer up card... :facepalm:

Sign the new papers and then refinance afterwards if you can find a lower rate and you're really worried about saving a $1/month.
 
#27 ·
Your post didn't say when you started financing / take possession of the vehicle. If you have made payments / down payments... Those are probably gonna and would probably not carry over to the new finance terms. Say you paid $2K down and made 1 month payment on it already and if you sign and return the paperwork in, you are probably agreeing on refinancing it at the current rate but at a $1000 vehicle "discount". (Which means you are out $1k + whatever that first month original payment is) Check everything carefully. This is the only trick I can think of up their sleeves. I think it is too good to be truth.
 
#30 ·
This.

Also make sure the taxes line up accordingly. It's not much, but you should be saving tax off of $1000...just little things to think of

I've had a dealer call me back saying that Bank A wouldn't approve me but Bank B did when I bought a car on a Saturday. Albeit it was the same rate, so nothing changed besides lender names
 
#34 ·
Our credit union is running a rate of around 2% on used cars, FWIW. That could save a tad over $20 a month if it's worth your time. If they won't give you their best rate now because of credit, you can keep the note you have with the dealer for a year and then try again.
 
#51 ·
Wow, interesting thread.

As a former F&I guy who knows the store you bought from, they're being straight on this deal. It's a $13k car, they aren't getting rich off the financing.

And the idiot posting about the low rate...it's a 2008 not a 2012 and you don't know his credit profile. If you think 5% is predatory then I think the sky is green.
 
#62 ·
Grey Mouser, I had PenFed before it was cool. I financed a 9 year-old Miata with 103k for 36 months at 1.49%. Same rate with my Z4 and 4Runner, went up to 1.99% with the rest of the credit unions.

Now they're 2.49%, which is still great. The credit unions are non-profit, unlike banks which are for-profit. It's really quite unfair what the regulators have done to the "good" banks but your definition of "predatory" is, at best, incredibly naive.
 
#64 ·
If you consider it naive, go ahead. It's just a difference of opinion to me.

DCU's may be 'non-profit', but when I bought my used car the FI guy was 'sure' that his list of big banks (BOA/Chase/etc) would meet that rate. I told him no thanks, I'll bank with my CU over BOA/Chase/WF.

I forgot about Penfed for low interest car notes too.
 
#63 ·
On what planet is 5% interest considered predatory? Jeez guys. :facepalm:

5% for a used car is very good. Not excellent, but very good. It's what you'll get from most banks for a 13k loan with an applicant in the 700+ credit region.

I've never gotten better than 2.6% on a new car loan. I consider that to be very good. Anything better than that is going to be unusual.

OP did fine at 4.99
 
#93 ·
i'd try to configure the terms in one of the free rate calculators you see on mint.com or something similar

work with your bank/credit union officer (you're a client of them even though this is a separate issue, and they could explain and break down the contract to make it easier to understand)

not sure if its too much legalese, but it's just simple math really

its a good example of financing a smaller rate /larger principal vs larger rate / smaller principal
 
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top