# Dealers not allowing outside Financing



## BostonVR6 (Dec 30, 2002)

Have you guys run into dealers not allowing outside financing?

During my Tiguan negotiation i went in saying i would be paying cash. Figured i could refi later cause most banks had better rates than the dealer.

Locked down the price and gave deposit.

I worked with a bank to get financing, and since the car is taking so long to get to port, I now having the financing ready before i even take possession. Bank said they want to send a check directly to dealer, as long as dealer names the bank as the lien holder on the title (which is normal i believe).

Dealership said they won't accept another bank's check and won't put my bank as lien holder cause they don't allow outside financing. Granted its my fault for assuming it would be okay. But seems odd to me, why they would care who the check comes from.

Not sure what maneuvering room I have now. Any ideas?

I asked the bank if they could just let me pay for the car in cash and then reimburse me by cutting the check to my name. They are "looking into it".


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## CTurner2022 (Jan 3, 2022)

I’m guessing it may be because profits are so slim for some dealerships right now they need you to finance through them. They get a kick-back or a percentage of your APR if you use one of their lenders. Just another way they are trying to make money in these hard times. I had a dealer sell me my 22 Tig below MSRP just because they wanted my trade that badly. New cars used to make a little bit of money, but now, dealerships seem to be doing everything they can to break even on new car dales.


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## azrakain (May 26, 2003)

CTurner2022 said:


> I’m guessing it may be because profits are so slim for some dealerships right now they need you to finance through them.


Profits are not slim, though. They are making more money per new car than ever right now. Yes, they get kick backs if you finance with them/their lenders, they should not care if the check comes from my personal bank account (something they already agreed upon in this instance) or my Bank's account.


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## Doughynuts (Oct 18, 2012)

When I was looking at a 4runner several months ago, had a dealer tell me in order to get MSRP the deal had to be financed and financed through them only. I thought that was outrageous and walked. The 4runner sold within a week.


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## Harold (Jul 31, 2000)

Finance thru dealer. No penalty for paying off sooner than doing their monthly payment plan. Get re-financed after you get the car. Pay off dealer loan, now its your bank loan.


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## VRW (12 mo ago)

Harold said:


> Finance thru dealer. No penalty for paying off sooner than doing their monthly payment plan. Get re-financed after you get the car. Pay off dealer loan, now its your bank loan.


Agreed. If you found the car you want, let the dealer finance it as long as there are no pre payment penalties on the loan. You can then re finance the loan with your bank. Like it was mentioned before, the dealers get a kickback from loan companies. If you want to find out for sure if they can require that you get loan through them, you can call your state attorney's general office, they will tell you and if the dealer is doing something illegal, they will contact them. But if you just want to get the car and not go through the trouble, let the dealer finance it then go to your bank and re finance it.


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## azrakain (May 26, 2003)

The biggest issue is with this refinance option is that POTENTIALLY your loan is now a used car loan and used car loans are at a higher rate than new cars loans traditionally. That very well may not be the case based on the individuals credit history, history with the bank, etc.


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## phil123 (Aug 13, 2009)

azrakain said:


> The biggest issue is with this refinance option is that POTENTIALLY your loan is now a used car loan and used car loans are at a higher rate than new cars loans traditionally. That very well may not be the case based on the individuals credit history, history with the bank, etc.


I'd be more concerned if there was a prepayment penalty like everyone else was saying. Generally speaking, my credit union has been great to deal with for loans. They couldn't beat VW Credit though on my eGolf.


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## OEMplusCC (Jan 27, 2013)

Dealership can accept outside financing but they make more kickback using in house financing.
You can actually take that to your advantage and negotiate better out of the door price. Although with todays situation no one wants to negotiate since they have 5 other buyers waiting

Sent from my Pixel 4a using Tapatalk


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## O-Deer (Sep 15, 2021)

Doughynuts said:


> When I was looking at a 4runner several months ago, had a dealer tell me in order to get MSRP the deal had to be financed and financed through them only. I thought that was outrageous and walked. The 4runner sold within a week.


I mean maybe it varies for car companies but plenty usualy have the lowest apr through them directly assuming your credit is “good” +


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## SmooVTEX (May 10, 2008)

The dealer I bought my wife's CPO Atlas from wanted to charge me an extra $750 for getting financing through a credit union (which coincidentally was one of their lender partners). I negotiated with them since I didn't haggle on their asking price (I felt it was fair), and just said "I can get the check and be back tomorrow". They sold me the truck without that fee, told them I'd be back to get my Tiguan 2 months later, then I bought my Tiguan from them as promised. Now both cars get serviced there. Both are CPO.

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## my1stvwtiguan (Dec 20, 2021)

The Canadian dealers might work a bit differently compared to the US. Car dealers will typically have partnerships with a few major banks and credit unions that offers AUTO Loans for financing, and yes, I am sure they get a referral bonus for each deal for an approved financing.

For individuals who goes independently to get auto loans, not all financial institutions in Canada offers auto loans, only a few that I mentioned above that is in the partnership network, will do auto loans. Other than that, a private lender will be an alternative if the buyer's credit is not good.

As for lien, that's typical for all auto loans, banks for private lenders

However, auto loans are usually open, so that is why early pre-payment as mentioned by Remzac does not carry any penalties.

As for leasing, and I think financing too, you can deal directly with VW Financing.


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## Ch3rp (12 mo ago)

I've never heard of this, I'm in the market for a Tiguan and have financing ready from USAA when I find the Tiguan I want.


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## BostonVR6 (Dec 30, 2002)

Thanks for all your replies.

As far as the dealer, seems my only option is pay cash, or finance through them. I dont want to have to deal with another credit pull and worry about prepayment penalty (when i payoff the loan to refi with my own bank) so I am going to attempt to just pay full in cash, and see if my bank will cut a check to me instead of the dealer. Still waiting to hear back from my bank. I think for the bank it will come down to ensuring their name is on the title as a lien holder so may need to send the title to them and wait to get reimbursed a little while. Thats a guess, will call them again and see what they say.


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## OttaCee (Mar 31, 2000)

One theory (because you didnt disclose price): Loan value above MSRP. One of my credit unions declined my loan request when Focus ST were just released with dealer markup, they would only give up to MSRP. I would of been on the hook for personal loan or cash to cover difference. Rates at the dealer were awful so I backed out. 

Agreed with others: Play the game getting a better deal using dealer financing. Want to sweeten the deal more: Ask them how long the loan through their bank needs to be active to benefit them. If you tell them to make things right so I dont flip the loan right away, see what they can do. Last 3 times ive done this: Got freebies, service coupons, additional price off the car, etc. Trust me its a bad look for the dealer if people flip the loans right away from the bank.


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## BostonVR6 (Dec 30, 2002)

OttaCee said:


> One theory (because you didnt disclose price): Loan value above MSRP. One of my credit unions declined my loan request when Focus ST were just released with dealer markup, they would only give up to MSRP. I would of been on the hook for personal loan or cash to cover difference. Rates at the dealer were awful so I backed out.
> 
> Agreed with others: Play the game getting a better deal using dealer financing. Want to sweeten the deal more: Ask them how long the loan through their bank needs to be active to benefit them. If you tell them to make things right so I dont flip the loan right away, see what they can do. Last 3 times ive done this: Got freebies, service coupons, additional price off the car, etc. Trust me its a bad look for the dealer if people flip the loans right away from the bank.


Forgot to disclose cost, im paying full msrp around 39K, nothing besides msrp. I am taking a loan from my bank for 30K even cause I am trading in lease that had some good equity. 

Since i already gave a deposit, i think the price is set? i doubt they would be willing to give anything, But i can ask per your suggestion. When i first negotiated the deal they didnt seem to care if i paid cash or financed, i thought they would have tried pushing financing a little. 

i have been waiting for the car for about 4 weeks, this inventory shortage is no joke.


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## phlegm (Apr 24, 2019)

Does the purchase agreement mention outside financing? Can a business entity in your jurisdiction refuse payment from an outside party? Can you get your deposit back?

I think you're best checking with a legal expert.

The problem now is that your financial deal just got worse, since they suspect you are locked in. (Unless they offer you the same deal anyone can get, at which point you can pay out at your own choosing.)


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## BostonVR6 (Dec 30, 2002)

So talked to my bank. They said if i can pay cash for the car, once i get the title from the dealer, to bring in the title to the bank and their is a form to fill to add them as a lien holder after the fact. Also show proof my insurance has them as lien holder as well. Then they will cut me a check to reimburse me for the purchase. So worst case im out of pocket for a few weeks while waiting for the title. Dealer doesnt have to be involved.

A little bit of hassle but seems like a good enough solution.


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## TigWan (Dec 20, 2021)

Bargain the interest rate with your dealer to get them to beat the bank rate. I would be VERY surprised if they don't beat it. The dealer's buying price for finance is extremely good and then they add a point or 2, or 3, or more if they can, to put in their pockets and give the finance salesman a better commission.


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## BostonVR6 (Dec 30, 2002)

Dealer was offering 3.35%, bank gave me 1.99%


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## TigWan (Dec 20, 2021)

Tell them to match or beat the bank.


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## JB4532 (Dec 16, 2020)

TigWan said:


> Tell them to match or beat the bank.


The dealer gets paid a broker fee for delivering your loan to the bank. If the loan is at an above-market rate, the dealer gets paid a higher fee because the loan is worth more (since it is a higher yielding asset). If the dealer is counting the fee that it is receiving from the bank as part of what “you” have agreed to pay for the car, then it is not going to want you financing elsewhere or paying cash, and it is not going to want to find you financing at a lower rate either. The banks take the loans and securitize them because the loans are worth more as part of a securitization than the are individually. The loans are packaged and tranched, and the different tranches get different credit ratings and pay out different yields. A lot of money is made on this. Sometimes the dealer might not get paid its broker fee if you refinance before the securitization goes through, which might be 2-3 months or so after you purchased the car and took out the loan. That is why the dealer might say that you cannot or should not refinance right away. Once the securitization goes through, however, literally no one cares if you refinance because at that point it is already built into the structure. It is assumed that a certain percentage of the loans will refinance sometime over the life of the security.


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## GregRob (Dec 16, 2020)

Harold said:


> Finance thru dealer. No penalty for paying off sooner than doing their monthly payment plan. Get re-financed after you get the car. Pay off dealer loan, now its your bank loan.



That's what I did with my last F- 150. The dealer said I'd get an extra $1000 off if I financed through Ford Credit. I said "For how long?" and they said 1 year. I refinance through my credit union after the year was up.


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## jjr57 (Sep 17, 2018)

When I purchased my last vehicle there was a $1,500 incentive to finance through the manufacturer credit company. I did finance with them. Asked the F&I person how long I had to keep the financing and he told me a year. It was a total and complete lie, and I knew that. By law, just about any auto financing product has to be offered with NO prepayment penalty at any point in the loan. This was no exception once you read the 'fine print'.

Long story short their finance charges for that year that I was lied to about amounted to just about $1,500, funny coincidence right? I paid the loan off immediately with zero fees so I got the $1,500 minus the first payment interest.

Don't let these fools lie to you, do you homework and you'll save a lot in the long run.


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## gerardrjj (Sep 4, 2014)

I don't know why they would care about whether you were paying cash as you initially told them or brining outside finacning. To their accounting system cash and an outside loan are exactly the same. They don't make anything off either option.

I suspect they make have quoted you too low a price and realized it afterward and now are trying to backtrack and find a way to make up that "loss" with their inside financing.

I, personally, would call the BBB or local/state consumer advocate or Attorney General (if you're in the US) and ask them if a car dealer can refuse to take payment from other than their chosen creditors. I, personally, doubt it's fully legal to refuse.


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## OhioSpyderman (Jul 21, 2021)

This is EXACTLY why I jumped at my 2021 SEL P Rline when I did.
I put down more than half and was happy to use their financing.
Hell, who wouldn't for 60 months @ 0.0%....lol...

Oh, yes, I did pay sticker, but they agreed to give me $550 to have the front bumper repaired for them putting on an un-needed front license plate holder. (Yes, they drilled holes IN the bumper).
oHIo changed to no front plates last year.
So, I pocketed the $550 and put my un-needed plate on the un-needed plate holder!

Bob.


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## BostonVR6 (Dec 30, 2002)

I guess when I bring my personal chashiers check to pickup the car I could as them if they are willing to match the 1.99%, if they do great, if not I will just take my title once I get it and give to my local bank to finance at the agreed upon 1.99%
Now if only the dealer would send me a p&s so I know exactly what to pay since I paid my last lease payment on my trade in.


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## 2wheelgnr (Mar 23, 2021)

I know the dealer makes a couple bucks on the financing deal but I never had a problem...Just bought my 2020 NOS Passat R Line and my wifes 18 passat rLine and told them I have financing and no issues.......Hmmmmm I mean can they really due that...I guess their business can do what they want but really?! That sucks....Never heard of that?!


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## 2wheelgnr (Mar 23, 2021)

or maybe bank can give you a bank check for the amount vs sending it to the dealer so you can hand it to them as if your own?!

vs bank sending to dealer?! I mean they are selling a car my god. Then there is issue about them as leinholder but that can be added.....so to speak.....I would think after the fact.....if the bank let you so to speak.


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