Should I ignore dealer request to make 3 payments using their financing.
January 12, 2015 7:47 AM   Subscribe

On Saturday a car dealer requested that I make three payments using their financing in order to honor a price we'd previously agreed on. Are there any issues with me not doing that and just refi-ing it today? There was nothing in writing regards the three months of payments.

So Saturday after much back and forth at the dealer we agree to a price on a car they have and shake on it. Later on (much) they come back and say 'well we can only do that price if you use our financing for three months'. Terms being much worse than what I'd already arranged. At the time I figure the difference between their payment and mine isn't that great so okay fine, and that's how they spin it. But if I do make three payments I'm really financing over 63 mths not 60 because I'm sure my first three payments will just be to the interest so principal remains the same (after hour 5 there this didn't occur to me at the time)

So my question is are there any issues with just refi-ing it today - there is a $70 prepayment fee which is no big deal (they didn't mention that either, although I should have asked)

posted by zeoslap to Work & Money (12 answers total)
I would absolutely walk away from this. They're playing games with you and being shady. Why would you accept this? I went through a long and exhausting car buying process not so long ago and at the end, I made it clear from the start with the dealers that I would walk away if things got shady. It also helped that I'd found several cars to choose from, so I did not feel desperate. You should go with a dealer who behaves in a trustworthy fashion worthy of your business, not someone who is going to try and hijack the deal and force you to finance or cost you an extra $70 (which really IS a big deal because that's YOUR money and was not part of the original agreement).

Your script: "Thank you, but this is not what we negotiated. I am no longer interested in doing business with you."

Also, next time, don't just "shake on a deal". Make them put everything in writing. At the end of my buying process, once I was sick of dealer's dirty tricks, I told them by email that I would not even visit their lot unless their terms met my stipulations IN WRITING before I got there. And I said "I am a cash customer. If I feel any pressure whatsoever to finance with your dealer, I will purchase from someone else."

Remember, for next time, that you are a cash customer, even if you are financing through a bank. This means you owe the dealer nothing with regard to information about your financing or your arrangements. They don't need to know that you're financing, what your rate is, etc. You are a cash customer and will be giving them a check. It doesn't matter who financed that check, all that matters is that you don't want to finance with them. So, get the deal negotiated in writing, have other options you're genuinely interested in and be prepared to politely walk away if there are any shenanigans.
posted by Gray Skies at 7:53 AM on January 12, 2015 [20 favorites]

I'd walk. This is shady behavior, and I wouldn't reward it. And I'd let both the salesperson and his boss know that you're walking because they have been dishonest with you and have reneged on your agreement, which did not include dealer financing as a term.

Unless this car is one-of-a-kind, you can find a similar deal somewhere else. But I wouldn't deal with people who are dishonest. Especially because there's no guarantee that you'll actually be able to refinance in three months at the same rate. Plus, if there's any sort of warranty, you'll be dealing with these people again, and I make it a point not to go into business with people I can't trust.
posted by decathecting at 7:54 AM on January 12, 2015 [4 favorites]

Response by poster: Well I didn't walk and said okay... so my only question is can I now just have my credit union refinance it without any ramifications regarding the verbal sure I'll pay for three months. I won't be dealing with them for anything else and the car was indeed pretty unique.
posted by zeoslap at 7:58 AM on January 12, 2015

I would think everything depends on what exactly is in writing and where you are in the deal process. Can you clarify that? Did you sign a buyer's order? Is the price in writing? Did you actually buy the car already? Did you give them a check?
posted by Gray Skies at 8:02 AM on January 12, 2015

Response by poster: Car is bought - only thing in writing is their finance deal with the $70 pre-pay clause.
posted by zeoslap at 8:03 AM on January 12, 2015

Pay the 70 bucks and walk away. You don't owe them any more than that. Your verbal assent to their pressure means nothing, legally or morally. They're the ones being shady.
posted by Johnny Wallflower at 8:19 AM on January 12, 2015 [8 favorites]

Response by poster: That's what I was hoping (and expecting) to hear Johnny. Thanks.
posted by zeoslap at 8:22 AM on January 12, 2015 [1 favorite]

The $70 is probably what they'll lose in commission from whatever lender they set you up with.
posted by hwyengr at 9:52 AM on January 12, 2015 [1 favorite]

I wonder if they asked for 3 payments thinking that a lot of people would just shrug it off and pay thru the dealer financing and forgo getting a refi?

Otherwise why 3 payments? What is the point? 3 payments worth of interest isn't worth losing a car sale over is it?
posted by ian1977 at 9:58 AM on January 12, 2015

Response by poster: @ian1977 - they get their kick back from the bank if the loan remains active for 3 months.
posted by zeoslap at 9:59 AM on January 12, 2015 [1 favorite]

I had my dealer ask the same thing when I purchased my two trucks. He said it was so that the dealer could get whatever deal they get from the Corp for selling corp financing. They only get their rebate if you make three payments.

We refi'd after either one or two payments (depends on if you consider the check we gave at closing as one of the payments). Never heard a lick from anyone. It is probably the finance manager who benefits by you making 3 payments. He probably gets his commission after three payments.
posted by 724A at 10:17 AM on January 12, 2015 [1 favorite]

first time I've heard of this, but I'd agree that the dealer's motivation is in getting some kind of incentive. If the deal is done and closed, the only institution that concerns you is the credit union. If they've got the $70 prepayment fee that is their only "remedy" for your taking their loan and then paying it off sooner (they usually get a loan fee on the front-end too, and they do these loans because 99% of them go on for years, so they're playing the odds. They lost on you; they gain on most).

The credit union sure as hell can't ding your credit or the like for paying off in full early. If that's what makes sense for you to do financially, I'd do it and not lose any sleep over it. These people (the dealer and/or the lender) sound shady. 3 extra payments is a hell of an extra fee/interest on a typical car loan.

The dealership, in case you're wondering, will still be happy to have your car for warranty service; they get reimbursed by the manufacturer.
posted by randomkeystrike at 12:38 PM on January 12, 2015 [1 favorite]

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