Even after you think you bought a car, dealerships can 'yo-yo' you and take it back

[like2read]

This article on NPR.org may give you second thoughts about going with dealer financing on a car.

The gist of the two step is the dealership takes your car in trade and signs a deal for a new auto "that is too good to be true". Weeks later, allowed by the fine print in the contract, they call and say that you need to come back in and sign an updated contract, with worse terms. Or, they will repossess the car. Meanwhile, they may have already sold your trade-in.

Article says "It does happen all too frequently".

https://www.npr.org/2023/02/04/11529321 ... -car-sales

Anyone ever seen this?

[barnaclebob]

Theyd be getting the car back with some green label herring in ziplock bags behind the dash board.

[Normchad]

Not this exactly.

Years ago, my neighbor bought a brand new suburban and traded in his sad looking Taurus. About two weeks later, I see the Taurus is back. He said the financing fell through, and they took the suburban back.

I was actually shocked that financing could fall through. (I had incorrectly assumed they could verify everything they needed to on the spot, and they wouldn’t hand you the keys if it could fail).

But I was more surprised that they had his old car to give back to him. And I’m assuming somebody took a bath here, because now they’re stuck selling a used suburban, instead if a new one, right? Somebody is eating that “depreciates as soon as you drive it off the lot” amount.

[enad]

I was buying a car one time and the finance guy (a big salty kind of guy that liked to chomp on cigars) was complaining that I was taking too long to sign the contract. I looked up and told him I was reading the front and the back (the fine print). He left his office and when he returned 20 minutes later he looked at the stack I had read and said I had no right to "red line" certain parts of the back of the contract. I stated if you want me to buy the car then this just doesn't belong in the contract. He was furious but said, initial the red lines and I asked him to as well and then I asked for a copy both sides. One of the parts I red-line dealt with arbitration in the event of a problem. That part read, the dealer would appoint an arbiter and I'd have to agree to the arbiter and the result of the arbitration and could not take any other legal action. You have to read every word on a contract for a vehicle or a house or anything that involves large sums of money. Some of the language is hard to understand (you almost have to be an attorney, but you can always ask questions). I recall asking the salty guy about something and even he couldn't explain it, but got an attorney involved who told him over the phone "just red line it"! How many other people sign those contracts?

[Makefile]

Anyone know if this is a subprime lending thing or more mainstream?

From reading about it, it appears that the would-be buyer leaves the dealership without knowing exactly what financing company they will be using. Rather, they appoint the dealer to try and find financing for them, and in the fine print, it says the dealer can cancel the sale.

If you either pay cash or use your own financing, or use the manufacturer's brand-name financing and apply on the manufacturer's financing forms, it seems you'd be pretty safe from this?

[boglegirl]

Something similar happened to my parents 30 years ago (and it actually worked out in their favor). They bought a new car, which my dad promptly took on a trip. The dealership called a couple of days later and claimed they had done paperwork for the wrong car, and that my parents owed them $2k more (that's a lot today, but it was really a LOT 30 years ago). So my parents agreed to return the car...as soon as Dad returned from out of state. The dealership got a used car back with 1500 miles on it - my parents got free use of it for that week or so.

[Makefile]

But I was more surprised that they had his old car to give back to him. And I’m assuming somebody took a bath here, because now they’re stuck selling a used suburban, instead if a new one, right? Somebody is eating that “depreciates as soon as you drive it off the lot” amount.

I imagine they either invoke the yo-yo option rarely enough that it's profitable overall, or it takes advantage of psychology such that virtually all victims will sign anything in order to keep the car. Perhaps a Boglehead would be able to say coolly, "You know, my wife/husband thinks it's too expensive anyway so I've been having second thoughts, so I'll be right down to drop off the car and keys."

[MathWizard]

I have never experienced it, or known of it to happen.

But then, I write a check for the car and drive it away with a bill of sale. Good luck with them getting it back.

I have never financed with a dealer. Twice early on with a bank, but now I just pay cash.

[pshonore]

Not this exactly.

Years ago, my neighbor bought a brand new suburban and traded in his sad looking Taurus. About two weeks later, I see the Taurus is back. He said the financing fell through, and they took the suburban back.

I was actually shocked that financing could fall through. (I had incorrectly assumed they could verify everything they needed to on the spot, and they wouldn’t hand you the keys if it could fail).

But I was more surprised that they had his old car to give back to him. And I’m assuming somebody took a bath here, because now they’re stuck selling a used suburban, instead if a new one, right? Somebody is eating that “depreciates as soon as you drive it off the lot” amount.

I once bought a new car and took dealer financing (supposedly cheaper than anyone else). When I went to pick it up, financing was actually much more. They had already processed my leased trade in. I had no way to get home so they put dealer plates on the new car so I could drive it and I went back a week later with financing from a different source. I think as long as a car has not been "registered" with DMV it can be sold as new. Demo cars work the same way although excess mileage on the speedometer can get a decent price break.

[Watty]

Anyone know if this is a subprime lending thing or more mainstream?

It would have to be. If the dealership financing fell through then someone with passable credit could just get a loan somewhere else if they did not want to return the car.

Something in the article did not make any sense. It said that they sold their trade-in but they still had a loan on it which they had to pay off. The problem is that if it was a conventional car loan there would have been a lien on the title which would prevent the car from being sold without paying off the loan. Maybe there was some sort of other pawnbroker title loan that did not have a lien recorded.

[alpenglow]

But I was more surprised that they had his old car to give back to him. And I’m assuming somebody took a bath here, because now they’re stuck selling a used suburban, instead if a new one, right? Somebody is eating that “depreciates as soon as you drive it off the lot” amount.

I imagine they either invoke the yo-yo option rarely enough that it's profitable overall, or it takes advantage of psychology such that virtually all victims will sign anything in order to keep the car. Perhaps a Boglehead would be able to say coolly, "You know, my wife/husband thinks it's too expensive anyway so I've been having second thoughts, so I'll be right down to drop off the car and keys."

I think the difference between your average Boglehead and the average person is a lack of liquidity. If your trade-in is gone, you can't agree to the new terms, and you need to get to work lest you lose your job you completely squeezed. Predatory dealers know this.

[Jack FFR1846]

Know what the sales contract says and be ready. With many, the dealer holds the note until they find someone to finance. Yo yo sales often occur on weekends when banks aren't open. Some dealers do this on purpose, giving you better rates than anyone will finance. In some states, this is illegal and the dealer will be left holding the note. You simply go to the dealer with a check every month. Or, of course you can just pay off the car.

I had something similar to this happen to me. I bought a truck using my GM supplier discount. The dealer was new to this but the sales manager brushed it off. "Of course we know how to calculate the price" was their response when I volunteered to walk them through it. It's not complicated unless you're a moron and as it turns out, the sales manager was a moron. So I pick up the truck and pay in full. Two weeks later, they blow up my answering machine that I need to come back. I call and low and behold, they sold the truck at their cost. Morons. I said "too bad" and they threatened that they had ways to get their money. "Oh really. I have the title already". I can see them complaining to GMs supplier discount people who would likely call him a moron for not being able to figure out the difference between their cost and their selling price.

[toast0]

Anyone know if this is a subprime lending thing or more mainstream?

The examples in the article seemed mostly sub-prime, although one was maybe not? But I've seen the language on my car loans, so there's definitely a thing where maybe the load passes a 'pre-approval', but the lender balks when the full paperwork comes through. If it happened to me, I've been in a position where I could bring the new car back and let the dealership deal with the miles I put on while we both thought I owned the car (or tell them where it is, and that they can pick it up if they bring me back my down payment), but I understand other people might not be in that same situation and it causes a real hardship. Unfortunately, keeping the car when the dealership can report it stolen isn't going to end very well. A reasonable dealership is going to try to do what it takes for the financing to go through, and keep the car sold, but you can't always tell who's reasonable before something goes wrong.

[like2read]

Perhaps a Boglehead would be able to say coolly, "You know, my wife/husband thinks it's too expensive anyway so I've been having second thoughts, so I'll be right down to drop off the car and keys."

I am with you.

Or, there are likely other sources of financing for the typical Boglehead.

If financing, this article provides another reason to go in with a loan pre-arranged from another source, like a credit union.

[windaar]

I write a check and walk out with the title, the bill of sale, and drive home in the car. Done.

[SevenBridgesRoad]

Write a check, no need to meet with the finance guy. The Boglehead way.

[CC1E]

I write a check and walk out with the title, the bill of sale, and drive home in the car. Done.

Never heard of walking out with the title on a new car. They come with a manufacturer’s statement of origin which gets converted into a title by the state. Title comes in the mail once the state processes the paperwork. So there is some room for dealer shenanigans even with a cash sale.

Another reason direct manufacturer sales are superior (Tesla style). Large corporations don’t bother with these small-time scams.

[SevenBridgesRoad]

I write a check and walk out with the title, the bill of sale, and drive home in the car. Done.

Never heard of walking out with the title on a new car. They come with a manufacturer’s statement of origin which gets converted into a title by the state. Title comes in the mail once the state processes the paperwork. So there is some room for dealer shenanigans even with a cash sale.

Another reason direct manufacturer sales are superior (Tesla style). Large corporations don’t bother with these small-time scams.

A reason to work with dealers which have a great reputation. I've always paid cash and never had even a hint of dealer shenanigans. A lot of cars and dealers over the years: Ford, Lexus, Toyota, Mazda, Honda, Subaru and Acura. Reputation matters.

[windaar]

I write a check and walk out with the title, the bill of sale, and drive home in the car. Done.

Never heard of walking out with the title on a new car. They come with a manufacturer’s statement of origin which gets converted into a title by the state. Title comes in the mail once the state processes the paperwork. So there is some room for dealer shenanigans even with a cash sale.

Another reason direct manufacturer sales are superior (Tesla style). Large corporations don’t bother with these small-time scams.

You're right; my bad. Title sent by the state to my house. Main point is that my relationship with the dealer ends as I drive home.

[CC1E]

I write a check and walk out with the title, the bill of sale, and drive home in the car. Done.

Never heard of walking out with the title on a new car. They come with a manufacturer’s statement of origin which gets converted into a title by the state. Title comes in the mail once the state processes the paperwork. So there is some room for dealer shenanigans even with a cash sale.

Another reason direct manufacturer sales are superior (Tesla style). Large corporations don’t bother with these small-time scams.

A reason to work with dealers which have a great reputation. I've always paid cash and never had even a hint of dealer shenanigans. A lot of cars and dealers over the years: Ford, Lexus, Toyota, Mazda, Honda, Subaru and Acura. Reputation matters.

I’ve dealt with a lot of local dealers of multiple brands, large and small. Most just try the normal scams (extended warranties, dealer add-ons, advertised price basing and switches, contract/financing bait and switches). If you know what to look for it’s easy to avoid, it just takes hours of sitting through their BS at pickup even if you’ve already negotiated the whole deal via email.

[HawkeyePierce]

I dealer-financed my Subaru and the finance person warned that it was possible that the financing may not come through, but my credit score is >800 and I'd put 50% down.

Negotiated the deal via email, was in the dealership for less than half an hour to sign paperwork and write a check.

[tooluser]

Theyd be getting the car back with some green label herring in ziplock bags behind the dash board.

Why green label?
https://fishfield.com/products/frozen-h ... -pack.html

[bwalling]

A reason to work with dealers which have a great reputation. I've always paid cash and never had even a hint of dealer shenanigans. A lot of cars and dealers over the years: Ford, Lexus, Toyota, Mazda, Honda, Subaru and Acura. Reputation matters.

Where are these mythical dealers, and how does one find one? Locally, we are overrun with Sonic and Autonation. I'll never deal with Sonic again. Only time I've ever demanded my keys back and left once we reached the paperwork stage.

[galawdawg]

That is a common issue that has gone on for years. It isn't always the dealer's fault, sometimes the buyer's credit is such that they are unable to secure financing.

While the current new vehicle inventory issues have changed the buying climate somewhat, in general it is very simple to avoid these types of issues:
1. Pay cash for your cars.
2. If you must finance, do so through your bank, credit union or other reputable source. Line that up before your purchase.
3. Do not negotiate trade-in vehicles as part of a vehicle purchase. That should be a separate transaction. The dealer can and will offer you more for your trade but you'll also pay a higher price for your new purchase. Get your trade-in quotes from CarMax and other dealers who will make a cash offer for your car. Negotiate an out-the-door price on your new car without any dealer financing or trade-in offers. Once you have that price nailed down, if you want to inquire about an offer for your trade, go ahead. But don't discuss a trade at all until you have reached an agreement on the new vehicle.
4. As much as possible, handle your new car purchase online or through email correspondence. While I am a very, very skilled negotiator, I detest the environment of purchasing a car at a typical dealership. So I will look online for vehicles that meet my requirement, then I email the internet sales manager, tell him I'm ready to buy within twenty-four hours and ask for their best out-the-door price. I make it clear that I will be soliciting offers from multiple dealerships for identical models with identical options and will buy from the one who offers the lowest price. No haggling, no playing one off the other. Place your bid, low bidder wins.
5. I then contact the "winning bidder" for my business, set up a convenient time to take delivery of the vehicle and advise them to prepare and email the paperwork in advance so I can review it for accuracy. If everything is correct, I expect to be in and out of there in fifteen (15) minutes. I will not meet with the finance manager, I will not consider any extended warranty, dealer options or anything else. Sign the papers, hand over the payment in full, drive off. If there were any games, I'd simply leave.

That has worked, for me at least, for every vehicle purchase I've made since 2000. A purchase price I was happy with and smooth delivery. Could I have squeezed a little harder and gotten a little more off? Maybe. But for me, it simply wouldn't be worth the hassle. Plus, when I say "give me your best price, if it is the lowest among those bidding, I'll buy from you at that price", I mean it. I stand behind my word.

[Cigarman]

This is also known as "spotting" where you complete all the paperwork and drive home with the car that day. After you have "fallen in love" with the vehicle most people will just roll over and sign the new paperwork/financing.

Happened once with me and my wife on a new car. 30 days passed and they called to say there was an issue. Finance guy tried to guilt us into accepting the car with the line "You have driven it for free for 30 days". My response was simple: "You insisted we drive it home that day and this is not my problem. Come and get the car, I will find another dealer to sell me the exact same vehichle."

Needless to say, they had sold the trade in and were between a rock and a hard place. Amazingly the issue disappeared!

[snackdog]

If they send your trade-in to the crusher, things can get even more difficult.

[evelynmanley]

I write a check and walk out with the title, the bill of sale, and drive home in the car. Done.

Never heard of walking out with the title on a new car. They come with a manufacturer’s statement of origin which gets converted into a title by the state. Title comes in the mail once the state processes the paperwork. So there is some room for dealer shenanigans even with a cash sale.

Another reason direct manufacturer sales are superior (Tesla style). Large corporations don’t bother with these small-time scams.

A reason to work with dealers which have a great reputation. I've always paid cash and never had even a hint of dealer shenanigans. A lot of cars and dealers over the years: Ford, Lexus, Toyota, Mazda, Honda, Subaru and Acura. Reputation matters.

Not all of those have great reputations. A Honda dealership in Northern CA pulled the "bait and switch" on me a few years ago. Never buying from Honda again.

[Jags4186]

I write a check and walk out with the title, the bill of sale, and drive home in the car. Done.

Never heard of walking out with the title on a new car. They come with a manufacturer’s statement of origin which gets converted into a title by the state. Title comes in the mail once the state processes the paperwork. So there is some room for dealer shenanigans even with a cash sale.

Another reason direct manufacturer sales are superior (Tesla style). Large corporations don’t bother with these small-time scams.

A reason to work with dealers which have a great reputation. I've always paid cash and never had even a hint of dealer shenanigans. A lot of cars and dealers over the years: Ford, Lexus, Toyota, Mazda, Honda, Subaru and Acura. Reputation matters.

Not all of those have great reputations. A Honda dealership in Northern CA pulled the "bait and switch" on me a few years ago. Never buying from Honda again.

My experience dealing with branded dealerships, particularly Honda and Volkswagen, is that reaching out to corporate quickly solves most issue you have. I haven’t had issues with purchases, but I have had issues with service and warranty work that a dealership service center said wasn’t warranty service, or things breaking a few miles out of warranty. Always been handled in my favor. Usually with a comment from the manager saying “I see you reached out to corporate relations.”

[evelynmanley]

I write a check and walk out with the title, the bill of sale, and drive home in the car. Done.

Never heard of walking out with the title on a new car. They come with a manufacturer’s statement of origin which gets converted into a title by the state. Title comes in the mail once the state processes the paperwork. So there is some room for dealer shenanigans even with a cash sale.

Another reason direct manufacturer sales are superior (Tesla style). Large corporations don’t bother with these small-time scams.

A reason to work with dealers which have a great reputation. I've always paid cash and never had even a hint of dealer shenanigans. A lot of cars and dealers over the years: Ford, Lexus, Toyota, Mazda, Honda, Subaru and Acura. Reputation matters.

Not all of those have great reputations. A Honda dealership in Northern CA pulled the "bait and switch" on me a few years ago. Never buying from Honda again.

My experience dealing with branded dealerships, particularly Honda and Volkswagen, is that reaching out to corporate quickly solves most issue you have. I haven’t had issues with purchases, but I have had issues with service and warranty work that a dealership service center said wasn’t warranty service, or things breaking a few miles out of warranty. Always been handled in my favor. Usually with a comment from the manager saying “I see you reached out to corporate relations.”

Excellent point! I wish I had thought of that when Honda pulled their bait and switch.

[SevenBridgesRoad]

I write a check and walk out with the title, the bill of sale, and drive home in the car. Done.

Never heard of walking out with the title on a new car. They come with a manufacturer’s statement of origin which gets converted into a title by the state. Title comes in the mail once the state processes the paperwork. So there is some room for dealer shenanigans even with a cash sale.

Another reason direct manufacturer sales are superior (Tesla style). Large corporations don’t bother with these small-time scams.

A reason to work with dealers which have a great reputation. I've always paid cash and never had even a hint of dealer shenanigans. A lot of cars and dealers over the years: Ford, Lexus, Toyota, Mazda, Honda, Subaru and Acura. Reputation matters.

Not all of those have great reputations. A Honda dealership in Northern CA pulled the "bait and switch" on me a few years ago. Never buying from Honda again.

Dealerships selling the brands I named are privately owned. That's why I said "work with dealers which have a great reputation". There are dealers with good reputations and others with poor reputations.

[evelynmanley]

I write a check and walk out with the title, the bill of sale, and drive home in the car. Done.

Never heard of walking out with the title on a new car. They come with a manufacturer’s statement of origin which gets converted into a title by the state. Title comes in the mail once the state processes the paperwork. So there is some room for dealer shenanigans even with a cash sale.

Another reason direct manufacturer sales are superior (Tesla style). Large corporations don’t bother with these small-time scams.

A reason to work with dealers which have a great reputation. I've always paid cash and never had even a hint of dealer shenanigans. A lot of cars and dealers over the years: Ford, Lexus, Toyota, Mazda, Honda, Subaru and Acura. Reputation matters.

Not all of those have great reputations. A Honda dealership in Northern CA pulled the "bait and switch" on me a few years ago. Never buying from Honda again.

Dealerships selling the brands I named are privately owned. That's why I said "work with dealers which have a great reputation". There are dealers with good reputations and others with poor reputations.

Completely agree with you! But this Honda dealership has been in my city for decades and I had purchased two cars from them previously since 1991, with no issues. So I trusted them - and then whammo. There was absolutely no reason for the bait and switch. I have a very high credit rating of 840, I have a history with Honda purchases, my bank is local, etc. I've found out that they've done this to others since it happened to me. That's where the NextDoor app has come in handy for where I live. So we are doing our best to make their activity known.

[MrBobcat]

I have never experienced it, or known of it to happen.

But then, I write a check for the car and drive it away with a bill of sale. Good luck with them getting it back.

I have never financed with a dealer. Twice early on with a bank, but now I just pay cash.

^This. When younger I had to finance our first few used vehicles through our credit union. Did not buy our first new car till I could pay cash for it.

[Jungle]

I've heard of this happening, but I would imagine it would be an extremely unlikely event for a Boglehead. Most of us would not put ourselves in a position where financing would "fall through". It is very unlikely to happen for those with a good credit score, and who are not pushing their DTI ratio to the limit, just to finance a car.

[evelynmanley]

I've heard of this happening, but I would imagine it would be an extremely unlikely event for a Boglehead. Most of us would not put ourselves in a position where financing would "fall through". It is very unlikely to happen for those with a good credit score, and who are not pushing their DTI ratio to the limit, just to finance a car.

I think most people would have the same impression you do, and that's understandable. But my credit score is 840, no debt, etc., and it happened to me at Honda in Northern CA.

[Jungle]

I've heard of this happening, but I would imagine it would be an extremely unlikely event for a Boglehead. Most of us would not put ourselves in a position where financing would "fall through". It is very unlikely to happen for those with a good credit score, and who are not pushing their DTI ratio to the limit, just to finance a car.

I think most people would have the same impression you do, and that's understandable. But my credit score is 840, no debt, etc., and it happened to me at Honda in Northern CA.

My bad... didn't read every post in this thread lol. It's disappointing that a dealer (or their bank/finance arm) would do that to a well qualified customer, possibly just to extract a few more dollars from them. It basically guarantees that they have lost all your potential future business, as well as that of your friends/family

[evelynmanley]

Thanks. It was shocking, and I wasn't familiar with the tactic until my own adult children explained it and were furious. But I have definitely spread the word to the community through our NextDoor app, and that's also where I found out that this Honda dealership has been doing this for a while.

[SimonJester]

4. As much as possible, handle your new car purchase online or through email correspondence. While I am a very, very skilled negotiator, I detest the environment of purchasing a car at a typical dealership. So I will look online for vehicles that meet my requirement, then I email the internet sales manager, tell him I'm ready to buy within twenty-four hours and ask for their best out-the-door price. I make it clear that I will be soliciting offers from multiple dealerships for identical models with identical options and will buy from the one who offers the lowest price. No haggling, no playing one off the other. Place your bid, low bidder wins.
5. I then contact the "winning bidder" for my business, set up a convenient time to take delivery of the vehicle and advise them to prepare and email the paperwork in advance so I can review it for accuracy. If everything is correct, I expect to be in and out of there in fifteen (15) minutes. I will not meet with the finance manager, I will not consider any extended warranty, dealer options or anything else. Sign the papers, hand over the payment in full, drive off. If there were any games, I'd simply leave.

This is becoming more and more difficult as most dealers will no longer provide quotes via email. The last couple of vehicles I have tried this with every dealer in 120 mile radius refused to quote over email... Come on down and we will discuss the price... And of course in the past year or so its pay a refundable deposit we will put your name on a list and call you once a vehicle comes in.... Price TBD on arrival... MSRP +++++

[quantAndHold]

When I first got out of college, had a blank credit report, no cash, and needed my first car to get to work, I got dealer financing, at 14%, from the local Toyota dealership. (It was the 80’s, so 14% wasn’t as bad as it sounds.) A couple of days later, the finance person called me and asked if I had someone who could co-sign on the loan. I said no, and she said she would do what she could. I guess she managed to place the loan, because I got a coupon book in the mail, and never heard from her again.

I can see how this would happen, though.

[Mudpuppy]

Thanks. It was shocking, and I wasn't familiar with the tactic until my own adult children explained it and were furious. But I have definitely spread the word to the community through our NextDoor app, and that's also where I found out that this Honda dealership has been doing this for a while.

Do you feel comfortable sharing more details about what exactly they tried to do? In particular, I'm wondering about the following: you mentioned that your bank is local; was your financing through the bank, through the dealership, or through Honda corporate?

[CletusCaddy]

I have never experienced it, or known of it to happen.

But then, I write a check for the car and drive it away with a bill of sale. Good luck with them getting it back.

I have never financed with a dealer. Twice early on with a bank, but now I just pay cash.

^This. When younger I had to finance our first few used vehicles through our credit union. Did not buy our first new car till I could pay cash for it.

Often times there is a discount for financing the purchase, even if you can afford it in cash. The Boglehead thing to do would be to take the discount.

[evelynmanley]

Thanks. It was shocking, and I wasn't familiar with the tactic until my own adult children explained it and were furious. But I have definitely spread the word to the community through our NextDoor app, and that's also where I found out that this Honda dealership has been doing this for a while.

Do you feel comfortable sharing more details about what exactly they tried to do? In particular, I'm wondering about the following: you mentioned that your bank is local; was your financing through the bank, through the dealership, or through Honda corporate?

I'm glad to share so that others don't experience what happened to me. I traded in a used car (that I had bought from this Honda dealership years before) at Honda on a Sunday. I filled out all the paperwork, which indicated that Honda set up the financing with the same credit union that I had for the used car I was trading in. Honda issued temporary license plates and everything seemed finalized. On Tuesday, a rep from the dealership called me and said that the financing didn't go through and if I wanted to keep the car, I had to accept a loan from a credit union that Honda usually does business with in a larger town near mine, and the interest rate was higher. I also had to get new temporary plates. It made no sense to me that the loan wouldn't go through, but he said it was a common thing with that credit union. One of my biggest mistakes was that I did not call the credit union to verify any of this. Believe me, my kids have given me hell for that! I didn't think much of it, never having heard of "bait and switch" before. It was pouring rain, and a rep from Honda came to my house for me to fill out the paperwork. My kids were quick to point out later that they were not doing me a favor because they wanted me to stay out of the rain - they wanted to rush this paperwork because they were doing the bait and switch. I feel like an absolute idiot now, looking back on all this. (As an aside, I did pay off the car in 2021 because of advice from fellow Bogleheads, so I saved quite a bit on the amount of interest.)

[Mudpuppy]

Thanks. It was shocking, and I wasn't familiar with the tactic until my own adult children explained it and were furious. But I have definitely spread the word to the community through our NextDoor app, and that's also where I found out that this Honda dealership has been doing this for a while.

Do you feel comfortable sharing more details about what exactly they tried to do? In particular, I'm wondering about the following: you mentioned that your bank is local; was your financing through the bank, through the dealership, or through Honda corporate?

I'm glad to share so that others don't experience what happened to me. I traded in a used car (that I had bought from this Honda dealership years before) at Honda on a Sunday. I filled out all the paperwork, which indicated that Honda set up the financing with the same credit union that I had for the used car I was trading in. Honda issued temporary license plates and everything seemed finalized. On Tuesday, a rep from the dealership called me and said that the financing didn't go through and if I wanted to keep the car, I had to accept a loan from a credit union that Honda usually does business with in a larger town near mine, and the interest rate was higher. I also had to get new temporary plates. It made no sense to me that the loan wouldn't go through, but he said it was a common thing with that credit union. One of my biggest mistakes was that I did not call the credit union to verify any of this. Believe me, my kids have given me hell for that! I didn't think much of it, never having heard of "bait and switch" before. It was pouring rain, and a rep from Honda came to my house for me to fill out the paperwork. My kids were quick to point out later that they were not doing me a favor because they wanted me to stay out of the rain - they wanted to rush this paperwork because they were doing the bait and switch. I feel like an absolute idiot now, looking back on all this. (As an aside, I did pay off the car in 2021 because of advice from fellow Bogleheads, so I saved quite a bit on the amount of interest.)

Thanks for providing more details. I'm sorry you went through that. I wonder if the dealership had some sort of kickback agreement with the larger, more expensive, credit union. There is one large credit union that I've had an account with since I was a child, but their practices get as close to a bad bank as you can legally/regulatorily experience while still being a credit union. They were even on NCUA notice for a while. I could easily see them doing something like this behind the scenes.

[percy]

4. As much as possible, handle your new car purchase online or through email correspondence. While I am a very, very skilled negotiator, I detest the environment of purchasing a car at a typical dealership. So I will look online for vehicles that meet my requirement, then I email the internet sales manager, tell him I'm ready to buy within twenty-four hours and ask for their best out-the-door price. I make it clear that I will be soliciting offers from multiple dealerships for identical models with identical options and will buy from the one who offers the lowest price. No haggling, no playing one off the other. Place your bid, low bidder wins.
5. I then contact the "winning bidder" for my business, set up a convenient time to take delivery of the vehicle and advise them to prepare and email the paperwork in advance so I can review it for accuracy. If everything is correct, I expect to be in and out of there in fifteen (15) minutes. I will not meet with the finance manager, I will not consider any extended warranty, dealer options or anything else. Sign the papers, hand over the payment in full, drive off. If there were any games, I'd simply leave.

This is becoming more and more difficult as most dealers will no longer provide quotes via email. The last couple of vehicles I have tried this with every dealer in 120 mile radius refused to quote over email... Come on down and we will discuss the price... And of course in the past year or so its pay a refundable deposit we will put your name on a list and call you once a vehicle comes in.... Price TBD on arrival... MSRP +++++

I've had the same experience. I did this with the two new cars I've purchased, over a decade ago. Email dealers with exact make/model/etc and ask for best OTD price. I was ready to buy a car a year or so ago, and decided to hold onto my 11 year car instead.

I understand there's a shortage of cars with the chip shortage, and therefore prices at the dealer are much higher. I can deal with that, but what I can't stand is getting yanked around. I get a price quote over the phone, then go to the dealer and find that the price I was given was sort of correct, if they were selling the car without tons of added BS options that no one would ever ask for. I wasted a lot of time going to dealers and finding the info they gave me via email or phone was not true.

And now a lot of dealerships and car makers have this fake "buy on the Internet" ploy. I understand car salesmen and managers and dealership owners have to make a living, but from the consumer's point of view, I don't what real value they're adding to justify the extra charges they finagle, and the many hours the average car buyer has to spend at the dealership.

I wish I wanted a Tesla, so I could avoid dealerships.

[vfinx]

Last month, the couple was awarded more than $225,000 in damages.

That sounds like a message is being sent. One would think that the arbitrator was selected by the dealership, or at least some kind of friend to the industry given the way contracts are crafted. I wonder if in this case, the industry itself wanted to come down hard on this offender, who is not doing the industry any favors with the negative publicity.