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Never buy a car based on a spot
delivery. Essentially spot delivery means that you are taking
delivery of the car before your loan is approved. This usually
occurs when you shop for a car during the evening, and on weekends,
after the banks have already closed.
Here is how it works:
Once you have agreed to buy the car a finance manager will quote
payments to you. If you agree then all the paperwork, including a
loan contract, is prepared. There will also be a document that
states “Subject To Credit approval.” The finance manager will have
you sign all the legally binding forms, and you will take delivery
and drive off in your car on the spot.
This seems to be a great way to buy a car, and most of the time
it is. But if your loan is not approved then it can be a real
hassle.
Do you really want to give the car back after you’ve already
bought it? Especially if you’ve shown it to your friends, relatives
and co-workers. You may have to unless you can arrange your own
financing or come up with the cash to pay for the car.
The finance manager may also tell you that your loan was
approved, but you’ll have to pay a higher interest rate, or make a
big down payment. This may be a legitimate fact, or it may just be a
way to gouge you for more money.
The best way to avoid all of this is to have your loan approved
before you go to the dealership. Both E Loan and Capital One offer
pre-approved auto loans. Approvals are fast, and you can apply
online. You’ll get a check to pay for your new car. Just fill in the
amount and you’re on your way.
If you prefer to have the dealer handle financing just be sure
that your loan is approved before you drive off in your new car.
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