If a dealership lets you take a car without having a definite loan approval, the car is not paid for and you must return it. Paperwork you signed likely includes a blank bank contract, a buyer's order that states your price agreement or a document that allows you to use a dealer plate. The dealer did not process the motor vehicle paperwork and still owns the vehicle.
Dealership Intentions
Dealerships work with a variety of lenders, including subprime lenders, banks, credit unions and nationally based lenders. Dealers submit credit applications electronically and are familiar with each lender's loan approval process. Based on your credit, budget and down payment amount, your dealership likely thought your application would be approved. It then let you take the vehicle because it thought your loan would be approved during business hours or after negotiating with a lender.
Overcoming Finance Issues
Your dealer couldn't obtain a loan approval, but that doesn't necessarily mean you're out of options. If the dealer did obtain a loan approval but at a higher interest rate or with a higher down payment requirement, you can pursue the loan based on the lender's requirements, although your payment is likely higher than originally stated. You can also reapply for a loan with a co-signer, or a person who has good credit that secures your loan. With a co-signer, you might eliminate any down payment requirements and high interest rate issues.
Bringing the Vehicle Back
Unfortunately, you must return the vehicle to the dealer if it is not paid for. If you had obtained a loan approval, your loan provider would have paid the dealer for the cost of the vehicle. Dealerships do not provide financing, so any paperwork that you signed was not between the dealer and you, but likely a bank contract between you and a lender it hoped to use; dealers have bank contracts on hand. Bring your vehicle back immediately. Unless you can find a co-signer or agree to any loan counter offers, the car is not yours.
Notice of Decline
You'll receive correspondence from any lenders that declined your loan. The letters will state the reason for the lender's decision and, as required by law, allow you to receive one free credit report from the bureau that the lender used to make its decision. Determine which issues affect your credit and improve your history for future lending possibilities.
Other Vehicle Purchase Options
If you need a car but financing is not an option, consider using a buy-here, pay-here lot. These dealers offer lower priced cars that buyers can purchase by paying the dealer directly. You will likely have to provide a down payment and pay off the car's balance within one year.
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