Don’t rely on car loan rate until it’s final

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Dear Terry,
My son just bought his first car all on his own. The dealership indicated that he was approved and that they would bid out the loan to several banks to get him the best interest rate. He signed paperwork indicating his payment would be a particular figure. He went to his insurance agent, got all of his insurance lined up, went back to the dealership and picked up the vehicle. This was two days ago. He just received a phone call from the dealership saying the interest rate didn’t come back at what they thought and his payment would be higher. Can they do that? What recourse does he have? Can he renegotiate the price of the vehicle to keep him within the same payment range he originally agreed to? I have never heard of such a thing. Help!

Kelly Pike

Dear Kelly,
This is, unfortunately, a common occurrence. A dealership will run someone’s credit report, determine that they can get them financed somewhere and then send them out the door with a contingency approval. Somewhere in the paperwork that your son signed, you’re likely to find language that says the interest rate and payment is contingent on approval. Your son can refuse to agree to the new terms and take the car back. The dealership may then find a way to pressure its lenders to accept the original contract. The lesson here is that you should never take a car off the lot until you receive loan approval in writing from the bank.

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