Dealer Can Take Your Car

Here's another common problem that I hear more often than I would like from viewers of my web site (http://www.leaseguide.com/index2.htm).

This is related to the previous post regarding problems associated with a flawed credit history. In this case, the consumer buys or leases a car, signs the papers, and takes the car home. A fews days or weeks later, the dealer calls and tells the customer that the finance company will not approve the deal as originally agreed and that the car must either be returned or more money is required.

"Is this legal?", they always ask. "Can they do this?" Yes, they can do it and it's done every day. You see, the dealer doesn't finance your car. He forwards your contract to his finance company, who must approve the deal and pay the dealer for the car. If the finance company doesn't approve, the dealer isn't paid for his car, and you are caught in the middle.

If you know your credit history is less than perfect, you should either find your own financing before you agree to buy or lease, or have the dealer hold the car until the finances have been accepted.

I Wrecked My Car

I often hear from people who have just totaled their automobiles and found that they still owe the finance company money, even after the insurance has been paid. They are usually shocked and don't understand why. They don't realize that the insurance company only pays what the vehicle is actually worth, not what is still owed, which can be substantially more, especially in these days of low down payments, deferred payments, and extremely long payoff terms.

The solution is "gap" insurance, which makes up the difference if this situation occurs. Most leases already have gap insurance built in. But most loans do not. If it's needed, it has to be purchased separately. It's not expensive and is well worth the cost.

Why Did I Do It?

Buyer's remorse is a common malady. I hear it all the time from automotive consumers who visit my web site. I just got an email today from a viewer who had just leased a car the day before and now wants out of the deal. She mistakenly thinks that there is a 3-day grace period for car buyers and leasers -- a popular and wide-spread misconception.

The problem is that many folks don't quite understand that buying or leasing a car is a much more significant decision that buying a new sweater. However, many use the same process for making their decision.

It's an emotion-based process that is occasionally backed up by a logic-based rationalization. Then, after the emotion has subsided and the deal is done, the real logical thinking takes over. "I can't afford the car I just bought." "I don't like the way it drives." It's much smaller than I thought." "I didn't get the deal I thought I got."

The key to smart car buying or leasing is to put the logical part of the decision process ahead of the emotions.