Desperately need advice on "spot delivery" issue

Ok, so this isn't really an issue with my car itself or Honda (the dealership isn't even a Honda dealership), but it's an "issue" for sure, and I didn't know where else to post this. Feel free to move/lock this thread if it's in the wrong place.

I bought my 2016 Civic EX-T on Wednesday of last week from a used car lot about an hour away. Everything seemed to go fine, although they got visibly frustrated with me because I was a tough customer and was at the dealership for over 5 hours negotiating. I'll try to keep the details short, but I feel they're necessary for understanding what the dealer might be trying to pull now.

1. First I negotiated on the price of the car, which Cars.com and CarGurus both rated as a "Great Deal" already due to the listing being almost $3k under their estimated valuation of the car. The car does have a scratch running the full length of the passenger side, starting from the front fender, going across both doors, and ending at the rear quarter panel. The scratch is white paint on a black car, but doesn't go down into the car's paint, so it's mostly surface, but in some spots near the rear of the car it has managed to indent the metal, so I negotiated another $800 off for that.
2. I negotiated another $300 above what they wanted to offer me for my trade. It was a 2006 Volvo S60 with 191,000 miles, practically all the lights on the dash on (check engine, ABS light), some wreck damage, no heat, and a loud exhaust coming from the engine compartment.
3. We go to the finance office, and the guy tells me "congratulations, you're approved! I'll just print up the paperwork and we'll sign it and you can drive off in your new car!" -- we hadn't even discussed the loan term or interest rate. So I start asking both of those: "72 months for the term-" and I cut him off right there. I said no way I'm doing a 72 month term. I want 48 MAX, 36 preferably, but let's talk about what the payment would be on 36 first because it might be a little higher than I want to go. Instead, he decides to give me some horrible reasons for why "you should always take the longest term possible, because smart people want to have more money in their pockets at the end of the month, don't you want more money?" I said "nah, I'm losing a lot of money in interest the longer the term is", and he's like "no, it's actually only $X per month over the term, though". I go "yeah, but over the course of 72 months, that adds up to thousands more over the life of the loan. I understand how small it looks when you break it up into 72 payments, but I want to talk about the bottom line, not the payments". He didn't like that. I finally got my way and got 48 months.
4. Now on the interest: he says "well, I was able to get you pretty close to prime rate for a first-time buyer, looks like the best offer is 11.99%". I said "hmm, that's weird, because I have this pre-approval from Capital One printed out in my pocket here and they said they'd give me 6%... and what does first-time buyer have to do with anything? You told me my FICO score is 712..." He proceeds to go on this rant about how "Capital One is a second-rate bank, they lie all the time on pre-approvals to make an attractive offer to hook the customer and then at the end of the day they always offer double what their pre-approval said whenever it's time to actually do it. I've been in finance for 30 years and I see it every day. Never trust Capital One, worst bank out there, predatory practices like that to do bait and switch, it's awful what they do to people." I said "ok listen, I'm not buying a car at 12% interest, I'm sorry. Let's just call Capital One right now and see if they'll actually do the 6% then. Because I won't pay anything over that."
5. He then went on a spiel about how first-time car buyers, regardless of credit score, are inherently risky to lenders since they've never had an auto loan. Pre-approvals mean nothing and as soon as Capital One does a hard pull and sees I've never financed a car before they'll double the rate to 12%, and all offers are going to be high, and I'll have to just accept that 12% is the best I'll get and I should just do it and refinance after 6 months. "You've never had any installment loans before, so 12% is prime rate for a first-time buyer - I had to pay 25% for my first car, I refinanced after 8 months and got 6% because of the payment history, that's what you have to do, it's part of the process for everybody". I said "dude... like I said, let's call Capital One right now and see what they say." He then leaves his office for some reason to "make some calls" (even though there was a phone on his desk), comes back and says another bank agreed to match the Capital One offer for 6%. FINALLY!
6. So then we get into paperwork signing. I notice they tacked on a $2500 service contract. This hadn't been discussed at all previously. I asked what this service contract was and why I wasn't told about it, and he goes "oh, there are signs everywhere, and your salesperson should have told you we give a 2 year powertrain warranty on all our cars..." I'm like "yeah... she excitedly told me that you give a 2 year warranty, I wasn't told that it would add $2500 to the price of the car. I don't want it then." Him: "But the engine in that car costs $4500 and the transmission costs $3500 if they die, so the warranty covers either or even both of those within 2 years and can save you a lot of money". Me: "Ok, but it's a 2 year old Honda, there aren't realistically going to be any problems with the engine or transmission within 2 more years. I don't want it." Him "Look at this stack of paperwork in my drawer here. These are all service contract work we've done and saved people thousands. We've had people decline the warranty before and literally drive off the lot and their engine blows the next day and we have to tell them there's nothing we can do." I said "I think I'll roll the dice on this one, sorry. Again, I don't want it." Him: "The bank might decline your financing then, I'd hate to see you get turned down for the loan, the warranty actually protects them in case of a major repair like that, that you maybe can't afford yourself, they don't want to lose their investment, so if you decline the warranty there's a good chance you don't get the car then." I told him that's BS, and for the last time, I don't want it. He then offers it for $1500. Still no. Then he says, whispering for some reason even though we're in his office, "listen, between you and me, I want to see you get this car, I don't want to see you lose financing, so here's what I can do: I'll give you the warranty at cost. $1000. I can't go any lower, take it or leave it, after that it's in the bank's hands to decide to finance you if you don't take it, and usually they won't." I said "yeah, I appreciate that. Think I'll go ahead and roll the dice on this one as well and we'll see what the bank says." He FINALLY gave up on the warranty after that.

Several people were visibly frustrated with me at several points throughout this whole process. I negotiated on everything and let them sell me nothing but the car at less than the advertised price. Sorry that the above ended up longer than I anticipated, but it's a VERY condensed version of all that actually went down (I was there for over 5 hours in total dealing with all of this). At the end of the day, I drove home in the Civic and felt like I got exactly the deal I wanted, and snickered about how the dealership probably didn't make a dime on this deal, since the way they make their money is by jacking up interest, convincing you to take longer terms so their portion of the interest is higher, and selling you on service contracts that very rarely get used.

Fast forward to today, everything seemed fine. I get a call from the dealership at 7pm: "Hi, this is so-and-so from the dealership -- I hate to do this, but is there any way you can stop back in real quick sometime this week? We're having a small issue with your financing, but we were able to draw up another agreement with the same bank, and we just need you to stop in and sign a couple papers. When can you make it in?" I asked about the terms of the new agreement, and she said "Sorry, we can't discuss any of that over the phone, but we really need you to come in, it'll be really quick this time, just need you to sign a small handful of papers and you can be on your way. Just let me know what day is best for you."

So I'm going in on Thursday. Due to the list of things above, I feel like they're trying to scam me in some way with a yo-yo financing thing or they realized they lost money or something on the deal and want to try and convince me to take another deal that'll come out in their favor. I already told her that if it's not exactly the same terms that I already signed up for, then I will leave the Civic and I hope they still have my Volvo, or else I'm not taking the trade-in value in cash I agreed to for it, I want the private sale book value. I know they almost certainly already scrapped it by now because they didn't want an old dirty wrecked car sitting in their lot, so if they're trying to be greedy and screw me thinking I'm attached to that particular Civic too much to walk away, I might be able to flip the script on them and make them pay me book value on the Volvo instead. It would serve them right.

Anyway, any advice on going into Thursday?

What does your sales contract say? That is what matters, not advice over the internet.

TimberWolf said:

What does your sales contract say? That is what matters, not advice over the internet.

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What specifically do you want to know about the sales contract? They sold me the car for:

• Vehicle price: $14,997 (sticker price was $15,750)
• Dealer service fee: $250
• Subtotal: $15,227
• Sales tax (6.75%): $1,027.82
• Title Fee: $15
• License & Registration fees: $18.50
• Trade-in Allowance: -$800
• Down payment: $0
• Total financed: $15,488.32
• Term: 48 months
• Interest: 6.0%
• Warranty: None ($0)
• Bottom line (after 48 months + interest): ~$18,500

The deal they WANTED to give me was (some numbers might be "napkin mathed", whereas above is all from the actual paperwork):

• Vehicle price: $15,750
• Dealer service fee: $250
• Subtotal: $16,000
• Sales tax: $1080
• Title fee: $15
• License & Registration fees: $18.50
• Trade-in Allowance: -$500
  
• Down payment: $0
  
• Total financed: $16,613.50
  
• Term: 72 months
• Interest: 11.99%
• Warranty (service contract): $2500
• Bottom line (after 72 months + interest + service contract): ~$25,000

No warranty and no service contract purchased, sold as-is, so that's all the bottom line of the deal. I saved about $6,500 total through negotiations. 2016 EX-T with 46k miles. 2 previous owners (not including me), was a "fleet vehicle" at one time. Clean title & clean CarFax. Long scratch down the passenger side with white paint in the scratch on a black car. No other notable damage other than a handful of minor normal wear & tear items. If I'm missing any important contract details let me know.

I felt like I walked out with an incredible deal. An out-the-door price after tax, title, registration, dealership fees, and $0 down of $262 UNDER the sticker price, which was already a "Great Deal" according to Cars.com and CarGurus, with nothing more than a scrap-worthy trade. Saving ~$6,500 through negotiations meant I made well over $1,000 per hour in my grueling 5 hours working as an amateur negotiator and first-time buyer, and I had a plan to save even more - put the car payments on autopay on my 2% cashback credit card that I've always paid in full every month and have never paid interest on - it's like having a 4% interest rate instead of 6%.

Seems the dealer crunched some numbers and realized what a bad deal this was for them, and now they want me to come back and sign a new agreement that's more favorable for them, or give the car back so they can get a sucker to buy it.

I'd just return the car & walk away with your old car, these folks are scammers, this deal is only beneficial to them, go elsewhere where you are being dealt with honestly. If you do have issues with the car, they ain't going to help you. For what you are paying, you could go to a Honda dealership & get a Certified car and better financing. JMHO gut reaction

that's why you should but cash. but, if that's an option, you probably should've walked away after first hour of sitting there. I'm glad you didn't do the mistake and didn't get ripped off. I did first time buying the car. not happening again.

Nevertheless, read the contract thoroughly. they might have a fineprint saying that you may need to return the car if financing doesn't go through. I'm not a lawyer so you might want to contact one

This tactic has been mentioned previously.. seems the dealer takes too long to process their paperwork and they claim the bank can't support the sale. In most cases, they've taken your trade and already wholesaled it out, hoping to force you to accept the new terms.

Shady.

Don't go. You have signed paperwork. If they let the sale happen, then they should have done due diligence. Call their bluff.. take your car back.. and in your agreement to take back your old car, in writing, let them know it will cost them $ to do so

And remember, its the "finance" sales guy who is the closer.. trying to add as much back into the original price as possible. I am sure they (the dealer) have played this game before, if for no other reason than I have read about it out here before!

Haven't posted here in a very long time, but I agree with everyone here.

You may technically be in breach if you don't go back in and ignore it, and they will undoubtedly send repo after you and fuck your credit score.

Go in, say you don't agree to the new rate, give the car back and ask for yours back. When they give you BS about how your car is already gone, threaten to either lawyer up or call the police, and they will back track.

Honestly, with what you described, I'd be worried the car isn't a flood salvage or something - I'd have walked out of there at about the 1/4 mark.

UPDATE, and thanks all for the advice!

I couldn't sleep at all last night worrying over this, and decided to call work and tell them I'd be late today because of this. I certainly didn't want to wait until Thursday to find out what was going on, or I'd be a complete wreck all week.

I consulted with a family member last night after posting this thread to find out what I should do to handle this situation once I went in. She offered to give me the cash to just do a cash deal and buy it outright from the dealer, and I would pay her back at 3% interest. At first I was reluctant to borrow $15,000 from a family member, but she insisted it was actually an investment for her because it was only a relatively small percentage of her savings (she just sold her house over the summer), so it wouldn't break the bank for her anyway, and she's getting 2.7% APY to have it sit in the bank, so if she gave it to me instead, she'd be making an extra 0.3% on it. That was too good of a deal for me to pass up, as 3% APR is lower than prime.

So I went to the dealer this morning and they said they had another offer already drawn up, all I needed to do was sign. 8.5% APR and "they could probably get it back down to the original 6% with a cosigner". I asked what was the least they would take for the car, taxes, title, registration & dealer processing fees included, 100% out the door price, for a cash deal. He said $15,250. I countered with $15k even, and they accepted. All told, I ended up getting it for about $14,000 before taxes and everything. That's actually about the trade-in value of the car, so pretty sweet deal.

So I'm happy to report that it worked out in the end, and definitely got a deal I'm happy with.

For anyone else who may be in a similar situation and stumble upon this thread, presumably you won't be as lucky as me to have someone who can do that, so the solution for me may not be helpful to you. I would say follow the advice of the other posters in this thread. Be wary of shady used car lots, "spot deliveries", and look up "yo-yo financing" -- this is unfortunately a very common scam among shady used car dealers, and for some reason it's actually still legal in most states (though some have outlawed it).

It's essentially a classic bait and switch tactic. The dealers want to jack up the interest rate, because if the bank approves you for 6% and the dealer gets you to sign for 12%, the dealer gets that extra 6%. If you make it clear that you won't accept a higher interest rate because, say, you already have a pre-approval for 6% so you already know what you can get, here's what they'll do:

1. They give you a deal for 6% just to get you out the door in the car. They already have the plan to do steps 2-4 below, because they didn't get to give you the deal they wanted to, so they're going to try to strongarm you into it.
2. They wait several days, so you've had enough time to become attached to the car, you've shown it off to your friends and family, you've posted pictures of it on Facebook, you've told all your coworkers all about your new ride, so you're invested at this point.
3. They then call you and say there was a problem with the financing, you weren't declined but the bank changed their mind on a couple terms and made some minor adjustments, so now they need you to come back and sign a couple papers just to get everything finalized.
4. You will go in and they will tell you the interest rate went up on the loan, they may ask for a cosigner and/or larger downpayment, and they will give you any one of a plethora of BS excuses ("prime rate unfortunately increased between when we signed and now, and since the financing wasn't actually finalized on that day, we just need to get you to the new rate", or "the bank that approved you changed their minds about the interest", or in the case of what my shady dealer told me: "that bank is refusing to work with our dealership because we've had 2 people stop paying on their loans months ago and the bank can't locate the cars for repo, so they're trying to make the dealership pay off the loans on the cars and refusing to do business with us unless we do, so we have to set you up with a different bank, but this one is a little higher interest").

All of this is called yo-yo financing or bait and switch. Every time a used car dealer's lips open slightly, lies spray out like a fire hose, so don't listen to anything they tell you. They are very slick, very streetwise, highly manipulative, and exceptionally good at what they do, which is lying to people, scamming people, and convincing or manipulating people into horrible decisions. Take this as a precautionary tale: do not deal with used car lots. Go to a manufacturer sanctioned dealership, or buy from private parties.

So I went to the dealer this morning and they said they had another offer already drawn up, all I needed to do was sign. 8.5% APR and "they could probably get it back down to the original 6% with a cosigner". I asked what was the least they would take for the car, taxes, title, registration & dealer processing fees included, 100% out the door price, for a cash deal. He said $15,250. I countered with $15k even, and they accepted. All told, I ended up getting it for about $14,000 before taxes and everything. That's actually about the trade-in value of the car, so pretty sweet deal.

So I'm happy to report that it worked out in the end, and definitely got a deal I'm happy with.

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Great story, and a great ending. Congratulations.

One thing I would add as advice.
Try to get Financing BEFORE you go to the Dealer, and have it already in place as an option.
It is VERY UNLIKEY that the dealer will offer you anything better.

Unfortunately, you are going to get a nasty shock when you next look at your Credit Score, and review your credit report
That "Finance Manager" has initiated so many Credit Inquiries that are now on your Credit Report !!!

If they don't get you one way, they get you another ...

And now expect an endless series of Phone Calls on whatever Phone number you gave them, anything from Maintenance Service companies, to Insurance companies and who knows who !!!

"FINANCE MANAGERS" are the lowest of the Low .. they are even worse than Used Car Salesmen !!