Mary was interested in trading in her current compact for a new sedan. Though Mary wanted to stay below $400/mo, she happily left the dealership that night with a $550/mo car payment. Afterwards, the salesman overheard the sales manager and finance manager talking about the deal.
Why the Deal May Not Be Sealed
© 2009 - A.M. Barrett
You’ve probably heard the saying, “Once you drive the car off the lot, you own it.” Did you know this may not be entirely true? The fact is that your car isn’t yours until the bank approves your loan. There is a clause in any dealership contract that states your purchase is “subject to financing.” But what does this mean? Read the following true story as an illustration of this point.
Mary Finds her Dream Car
The Conversation
| Sales Mgr.: | “Can we get an 84-month loan at these terms?” |
| Fin Mgr.: | “The odds are very slim.” |
| Fin Mgr.: | “Looks like this is going to be a re-sign.” |
| Sales Mgr.: | Give me some time to look at options. I'll get back to you.” |
The Re-Sign
The deal is far from complete even when a customer signs all the paperwork. It takes time for banks to approve loans. As it turns out, Mary's new car cost nearly as much as her annual salary. The banks weren't interested. The finance manager called Mary back and asked her to come in to finish up the paperwork. When she came in that night, the sales manager dropped a bomb on her.
| Sales Mgr.: | “Unfortunately, we can't get your deal financed as it is. The banks want to see a little more money from you. We would need about $4000 down to finish the deal. Can you do that?" |
| Mary: | “No! I said that $500 down is the most I can do. So what are my options?” |
| Sales Mgr.: | “Unfortunately, if you don't have the money, we're going to have to bring your old car up front and repossess the new car. We're sorry about the inconvenience.” |
Just like that, the deal that was supposedly sealed weeks ago was undone.
How Can Car Dealerships Do This?
The dealership can never be 100% sure of a customer's loan acceptance. However, salesmen, sales managers, and finance managers use this uncertainty to their benefit. How?
They desparately want to send you home in a new car today because they know you’ll be much more likely to find extra down payment money, in case the loan process goes bad, if you’ve driven a brand new car for a week or two.
SalesmanX Recommendation
Secure your loan before you go to the dealership. When you do this, you'll receive a check from your bank that cannot be taken back weeks later. This is only one of the crucial steps that you need to take when buying a car. With the purchase of "Inside the Mind of a Car Salesman", I'll give you the tools you should use throughout the car-buying process.
