Every state has its own laws regarding vehicle purchases. However, one thing remains constant. Any dealer that you might consider buying a car through will have a provision on their purchase order, on their contract, or in an addendum to the contract and purchase order that basically says the purchase is only valid if they can find financing on the contract as written. Some states put a limit on how long the dealer has to find you a loan. I have heard of people that have had a vehicle for almost 2 months before they were told the contract was null and void.

In Washington, we have four business days after the contract is signed to get an approval from the lender. If we are not able to find a lender willing to take the contract as written, then we need to call you and tell you that the current contract is null and void, and you must return the vehicle. However, if during the funding process, the lender finds a piece of information that they do not like, the lender can reevaluate.

Can the lender change their mind about giving me an auto loan approval?

Yes. The lender is writing the big check for the car, you are writing the little check every month. I have had a lender turn someone down just because he was a jerk on the phone. They decided that since he was confrontational and argumentative, he would probably be the same way when it came time to pay his car loan. If the lender finds a recent large job gap they did not know about, find out your are really self employed, finds out you are a commission employee, or some other piece of information they previously did not have, they can turn your loan down. The lenders all have different rules for different income types and credit problems. Additionally, most lenders put fine print in their approval such as “approval subject to verifications” which basically means that any info they receive could result in you going from an approval to a turn down.

In fact, even a landlord verification can screw up your auto loan. I had a landlord tell the auto lender that the tenant never paid her rent before the 15th, and she was currently 3 weeks late. The lender informed me rather quickly that they no longer wanted to do that loan.

This situation would not affect the 4 business day rule in Washington, because the dealer did have an approval for the loan…however, the lender verifications killed the deal for that customer.

Do I have to keep the car if the dealer changes the terms of the contract?

No. If you buy a car for $19,000 at 10% and the dealer says they got you approved to buy the car at $18,000 and 15%, you do not have to do the deal. You can take the new deal, or walk away. Do not listen to the salesperson if he says you have to take the new deal. If you do not sign the new contract, the auto dealer cannot get funded on the loan.

Do I need to return the car to the dealer if they cannot get me financed?

Yes. Dealers are smart enough to have a purchase order that stipulates the term of vehicle return, or an addendum that says you need to return the vehicle to the dealer. The WA LAW buyer’s order that we use gives the buyer 24-hours to return the vehicle once they are told that the financing was not secured.

Do I have 3-days to change my mind about buying a car?

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Tags: auto loan terms, buying a car, change my mind, cooling off period, lender approval, lender verification, loan approval, oac, on approval of credit, vehicle purchases, Washington

This entry was posted on Friday, October 30th, 2009 at 4:28 PM and is filed under Autos, Car Buying Tips, Car Dealers, Car Loans, Credit, Financing, New Car Dealers, Used Car Dealers, Vehicle Financing, Washington, auto dealers, auto financing, auto lenders, auto loans, bad credit auto loans, bad credit loans, car buying advice, cars, loans, news. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.