Honda Financial Service denied financing

[davos]

Originally Posted by Black Pearl

Davos, do I read your correctly? The dealer gets a preapproval from Honda Financial based probably on the fact the guy is not wanted for murder. So the sale goes through on the preapproval. Meanwhile something turns up so Honda Financial denies the loan and the dealer has something more expensive lined up that he probably gets a kickback on. Lovely! First, I thought that a credit check could be done in less than hour. Second, I think it is pretty s----y pulling this kind of crap. Once again the car dealers with the aid of Honda are on my s--t list. There seems to be no depths to low to go.

I am a babe in the wood on this car financing crap. I financed one car 30 years ago through the credit union at work. Since then I financed them through my own savings.

BTW on the posts above, while I was ranting and raving and writing the post, other posts snuck in.

Yep
Friend of mine bough a Honda Civic a few years ago. If memory serves me well he was given Honda financing (it was one of those special rates) with contingency that it has to go through financing in corporate, which took couple of weeks. But there was clause in paper work that if it's not approved he will be given some other financing at stated rate. I think it works similar to mortgage application. You can get pre-aproval by loan officer, but you do not really have it untill it goes to loan underwriter (or whatever they call him).
And it might be especially true with cars sold on Saturday afternoon when all banks are already closed.
I would suggest checking paperwork and calling finance person at the dealer. He/she should be able to answer all the questions at once.
I have tried to check Honda financing on web, but they are pretty mute about it.

[davos]

Bump
Any updates?

[ga cr-v lady]

Although we haven't heard back from the original poster on this topic as to what actually happened, I think I went through a similar situation. When I decided to buy my V, I applied for financing through the Honda website and received a pre-approval from them for a specific amount to be financed, but with no info on terms or rates. When I got to the dealership, they weren't interested in my pre-approval letter and said that I had to reapply for Honda financing at the dealership. They approved me, drew up the contract, I signed and took the car home. A few weeks later, I got that stupid letter from Honda finance saying that they denied my original finance request, but that I could accept the Honda finance terms as offered by my local dealership at a different interest rate from the original finance offer (which Honda never told me). The letter also said that I should continue making payments as agreed on in the dealer's finance contract.

I agree that this was probably some formality required by a government agency that allows Honda to legally justify whatever rate given to me by the dealer, versus whatever rate I thought I was getting in the original pre-approval. It also may have had something to do with the fact that I financed more than what was in the original pre-approval from Honda finance. Again, a formality...

I think the bottom line is that if a persons walks off with a car AFTER signing a finance contract at the dealer, then it doesn't matter what kind of finance denial letter you get weeks later. The car is yours...for better or worse

[davos]

Was there anything in paper work what could suggest that something like that could happen? I never dealt with car financing and my only experience is with mortgages. It would be strange if they would let you take possession of the car on unknown terms.
Are the payments you mentioned based on Honda or other financing?
Thanks for sharing your story - it seems that a lot of people do not really fully understand how car financing works (including me). If Honda reads this post may be they can shed some light on issue.

[ga cr-v lady]

Originally Posted by davos

Was there anything in paper work what could suggest that something like that could happen? I never dealt with car financing and my only experience is with mortgages. It would be strange if they would let you take possession of the car on unknown terms.
Are the payments you mentioned based on Honda or other financing?
Thanks for sharing your story - it seems that a lot of people do not really fully understand how car financing works (including me). If Honda reads this post may be they can shed some light on issue.

I don't recall anything in the paperwork suggesting that I might get a followup from Honda regarding the finance. It freaked me out for a SECOND when I first got the letter, but after thinking about it and realizing what happened, I haven't given it another thought until I saw this thread. My financing is still with Honda Finance and that's who sends my payment coupons to me. So I have no doubts about that, regardless of what the letter said. People who are financing through a dealer only need to be concerned with what the final terms are from the dealership. If you're not happy with the price of the car, the interest rate, or monthly payments in the final finance contract, then you need to walk away without the car.

Although I'm not a car salesperson, I can't think of any scenario when a dealer would let you walk off with a car without signing a contract that specifies terms. I even had to sign a "contract" of sorts when I took the dealer's loaner car for a day while I waited for them to get the V I wanted. This only happened because I was trading in a vehicle and once you agree to the trade, I guess they don't want you to drive the vehicle that you're traded. (That part was kind of silly to me.) Anyway, the loaner contract specified what I could and could not do to that vehicle and when I had to return it. So, obviously the person who started this thread left out some major details about how s/he acquired the car in the first place. They clearly signed something before they took the car. I guess if what they signed did not include finance and payment terms, then it's possible that they might have to return the car. But, I seriously doubt that is the case.

[davos]

Let me check if I understood it correctly.
You have signed loan on the car w HF for two possible terms?
You are paying right now higher rate, but it was possible that you could get lower if approved?
My understanding is that when one is taking a loan it has to have rate, term and minimum monthly payments.
Am I missing something?

[Black Pearl]

But, if I was a betting man this is just another one of those cockeyed deals between Honda dealers and Honda Finance.

Oh yes! Your preapproved for this great rate but we have to do this little credit check. So in the meantime we will go through with this rate, but by the time your first payment rolls around...ba ba ba ba BS BS BS.

Really, how long does it take to do a credit check? I don't know but I would be extremely surprised if it took longer than hour. OK so I am out of my mind, and it takes a day. I can't believe it takes two weeks.

This whole deal reeks of typical car purchasing--the consumer be damned--BS!

[ga cr-v lady]

Originally Posted by davos

Let me check if I understood it correctly.
You have signed loan on the car w HF for two possible terms?
You are paying right now higher rate, but it was possible that you could get lower if approved?
My understanding is that when one is taking a loan it has to have rate, term and minimum monthly payments.
Am I missing something?

I don't know about the person who started this thread, but I only signed documents for one loan - at the dealership. My original "preappproval" was for an amount to be loaned but did not specify rates and did not include any finance arrangements or documents. I do agree with BP that it's some type of monkey business that they use to lure people to the dealership. In my case, it didn't matter because I had already done my research and decided to buy the V. Although the preapproval I got online was not used at the dealership, it was based on the initial credit check done by Honda and therefore indicated that I would probably qualify for a decent rate through the dealer. I guess if you've never financed a car, it sounds like mumbo jumbo. I've financed several, so it's not that big of a deal to me.

[naturehut]

The same thing happened to me a few years ago. I purchased a car on a Sunday when the banks are closed. They told me not to worry. I have financing for the car. The next day, I found out that the financing was declined. The dealer found other financing for me. They want to make the sale. They don't want the car back. They will do everything they can to find you financing. The problem is that it may be from a bank that will start calling you if you are one day late with the payments. I have experienced that. When I bought my 2001 CRV, I got pre-approved by Capital One Auto Financing. They sent me a blank check that was good for a certain amount. All I had to do was shop for a car in the price range of the check and give it to the dealer to fill out. The dealer begged me to fill out a credit application to see if they could find me better financing. The finance manager gets a commission for using certain banks. They couldn't find me better financing, so they took the blank check. I think Capital One Auto Financing is the best way to go. It's like already having cash to buy the car.