HELP! The car loan was denied after I already bought the car!?

dogememe

dogememe

Joined
Apr 15, 2017
Messages
4,517
Location
Napa, CA.
I purchased a used 2015 Chevy Volt on Monday. Absolutely LOVE the car. Showed it to my partner, family, friends, coworkers, it's a blast to drive, I'm saving so much on gas, and I even put new wiper blades on it.

Problem is I got a letter today that the bank has declined the loan due to "Modifed LTV too high". I'm not entirely sure what that means but I'm suspecting it's because I did not put any down payment by the time tax, fees, the gap insurance I elected to buy from the dealer, etc. that I'm basically "too upside down" on the car loan.

What on earth are my options? I'm assuming I will have to either give back the car or put some cash into the deal to get the loan amount down. Problem is, I have no money to give otherwise I obviously would have! I do see the same dealer I "bought" the Volt from has a Fusion Energi for like $4K cheaper so might see about exchanging for that but honestly I read the reviews the Fusion Energi is not nearly as good of a car as the Volt.

I'll have to go in tomorrow morning to the dealer and see what to do but honestly I'm frustrated and upset and unsure about what to do! Anybody have advice? Thanks.
 
Sorry to hear this. Must be very frustrating. LTV = loan to value.

I would first see if you can discuss the price of the car with the dealer, explain the situation, and use the position of "this deal will be soured b/c of the bank LTV too high, so can you drop the price of the car vs. souring the deal?" They dealer might very well drop the price of the car by an amount to keep the deal alive. This might work to your advantage. Go in, talk to the sales manager, shrug your shoulders and present the problem, and see what he comes up with. He might very well just reduce the price to keep the deal. He probably has a large profit margin on it. Oh and it helps if you pull the blue book value on the car to see how much you are overpaying...

(I had a situation buying a house, where ultimately the appraisal came in lower than the contract agreed amount and the sellers were boxed in and had to lower the price of the house or risk souring the deal, and it worked in my favor and the price was reduced to the appraisal.)

Next, was the loan guaranteed in writing and do you have a solid contract, or is it a pending/contingent contract? The former might give you leverage if you can suggest they are in breach of contract.

A few other ideas.
Can you put down some cash by getting a short term personal cash loan anywhere on decent terms? Family, friends, even pawn something? Can you sell anything valuable quickly at a fair price (don't scream desperation in any ads, FYI)?
Can you get anyone with good credit to co-sign on the note? Can you get your credit score increased overnight (I know that's unlikely but it's worth a try to contact them to see if there's any mistakes in your report; that usually does take a month to adjust however).
dogememe said:
time tax, fees, the gap insurance I elected to buy from the dealer,
Click to expand...
Can you de-select these for the time being and not incorporate these into the loan to reduce the loan value?

Good luck! You got this!
 
I'm not sure. I've never heard about it getting as far as a letter. I had a dealer say this to me once when I was younger, but I think they were pulling some stunt. I don't know for sure what the reasoning was, but at the end of the day the loan was fine and secured and I didn't give the car back.

Did you take your own loan out or run through the financing options the dealer offered? Typically if you go through the options for the dealer they'll reach out and shop around to sell it to a bank and then you'd just get mail to show you who your lender is. You're not stuck to just one option in that case.
 
Torrid said:
I had a dealer say this to me once when I was younger, but I think they were pulling some stunt. I don't know for sure what the reasoning was, but at the end of the day the loan was fine and secured and I didn't give the car back.
Click to expand...
It's not uncommon, and I'm cynical about it being a scam TBH. When I was a young buck lawyer, I went with my girlfriend to the car dealer and helped her negotiate a great deal. Similar to the OP we took it home, she told everyone, became emotionally attached, and a day or two later "the financing fell thru, and we have to raise your interest rate."

I wasn't having it. This is when you have to play a bit of hardball. I went down with her, showed them the agreement where the terms were clear, etc. We kept the car and original agreement in place. I think some unscrupulous dealers will do this to try to get most people to simply agree to the amended terms. Have to hold your ground if possible.
 
dogememe said:
I have no money to give otherwise I obviously would have! I do see the same dealer I "bought" the Volt from has a Fusion Energi for like $4K cheaper so might see about exchanging for that but honestly I read the reviews the Fusion Energi is not nearly as good of a car as the Volt.
Click to expand...
Another point, if I were you I would NOT present options less favorable to you.

I would simply present the problem and let the dealer work it out. As @Zee09 says, tell them you're ready to walk away. They've been in this situation before, probably a playbook answer to lower the price to match what you can borrow. In the alternative, you can suggest that. That would be a best case for you.

If the other options I suggested aren't viable, walk.

You never said what the blue book is on the car and what you are paying, FYI. If you are radically overpaying this might be a blessing in disguise given your apparent bad finances of borrowing to the max for a car. Just a thought.
 
It's called a yo-yo loan, or "spot delivery." The papers you signed will probably have a clause about returning the car if the loan falls through. This is at least mostly a scam, as you're now attached to the car, you trade is "gone" (not really) and you'll sign "anything" to keep the car.

The dealer will probably invite you back and offer another loan at a usurious rate. If you go there in the Volt, they'll take it with the other key, block you in, etc.

I'd look around for alternate financing from a 3rd party before you go in or even call them so you know what your options are. Look over your paperwork for the payoff amount.
 
This may or may not be a scam, but the advice given about seeking a 3rd party loan source are spot-on in my opinion. If you are a member of a credit union I'd suggest you check with them first as in my experience they often have better auto rates than most banks. If you are not a member of a credit union it is easy to find/join one. For example, looking at a credit union I use (Penfed) their 72 month refinance rate for a used car is currently 5.74%. I'm sure there are others better or just as good. Go to the dealer armed with your own financing. If the dealer can do better let them, but be proactive and do not let the dealer dictate the process.
 
sopususer said:
This may or may not be a scam, but the advice given about seeking a 3rd party loan source are spot-on in my opinion. If you are a member of a credit union I'd suggest you check with them first as in my experience they often have better auto rates than most banks. If you are not a member of a credit union it is easy to find/join one. For example, looking at a credit union I use (Penfed) their 72 month refinance rate for a used car is currently 5.74%. I'm sure there are others better or just as good. Go to the dealer armed with your own financing. If the dealer can do better let them, but be proactive and do not let the dealer dictate the process.
Click to expand...
The letter is from my local credit union who I am a member with for my bank account and a credit card. That’s who the dealer put the financing with.
 
dishdude said:
Did you trade your Escape in? Was there negative equity?
Click to expand...
I sold the Escape by trading it to a used car dealer for a 2012 Leaf plus cash, then I traded it in the Leaf at the Chevy dealer where I got the Volt. No negative equity as the Escape was paid off.
 
eljefino said:
It's called a yo-yo loan, or "spot delivery." The papers you signed will probably have a clause about returning the car if the loan falls through. This is at least mostly a scam, as you're now attached to the car, you trade is "gone" (not really) and you'll sign "anything" to keep the car.

The dealer will probably invite you back and offer another loan at a usurious rate. If you go there in the Volt, they'll take it with the other key, block you in, etc.

I'd look around for alternate financing from a 3rd party before you go in or even call them so you know what your options are. Look over your paperwork for the payoff amount.
Click to expand...
That's it! I thought this was illegal.
 
dogememe said:
I purchased a used 2015 Chevy Volt on Monday. Absolutely LOVE the car. Showed it to my partner, family, friends, coworkers, it's a blast to drive, I'm saving so much on gas, and I even put new wiper blades on it.

Problem is I got a letter today that the bank has declined the loan due to "Modifed LTV too high". I'm not entirely sure what that means but I'm suspecting it's because I did not put any down payment by the time tax, fees, the gap insurance I elected to buy from the dealer, etc. that I'm basically "too upside down" on the car loan.

What on earth are my options? I'm assuming I will have to either give back the car or put some cash into the deal to get the loan amount down. Problem is, I have no money to give otherwise I obviously would have! I do see the same dealer I "bought" the Volt from has a Fusion Energi for like $4K cheaper so might see about exchanging for that but honestly I read the reviews the Fusion Energi is not nearly as good of a car as the Volt.

I'll have to go in tomorrow morning to the dealer and see what to do but honestly I'm frustrated and upset and unsure about what to do! Anybody have advice? Thanks.
Click to expand...
Modified LTV probably includes the dealer upward market adjustment in price. Go to the dealer and let them know they need to make it work at the terms you agreed to and be prepared to walk away and go buy a corolla.
 
dogememe said:
I purchased a used 2015 Chevy Volt on Monday. Absolutely LOVE the car. Showed it to my partner, family, friends, coworkers, it's a blast to drive, I'm saving so much on gas, and I even put new wiper blades on it.

Problem is I got a letter today that the bank has declined the loan due to "Modifed LTV too high". I'm not entirely sure what that means but I'm suspecting it's because I did not put any down payment by the time tax, fees, the gap insurance I elected to buy from the dealer, etc. that I'm basically "too upside down" on the car loan.

What on earth are my options? I'm assuming I will have to either give back the car or put some cash into the deal to get the loan amount down. Problem is, I have no money to give otherwise I obviously would have! I do see the same dealer I "bought" the Volt from has a Fusion Energi for like $4K cheaper so might see about exchanging for that but honestly I read the reviews the Fusion Energi is not nearly as good of a car as the Volt.

I'll have to go in tomorrow morning to the dealer and see what to do but honestly I'm frustrated and upset and unsure about what to do! Anybody have advice? Thanks.
Click to expand...
I wouldn't get too excited about this just yet. Wait until the dealer calls you and tells you to bring the car back.
What has probably happened here is that the dealer likely submitted your car deal to more than one lender (very common) and one of them has turned your deal down (also very common). By law this lender had to send you a letter informing you of this. Another lender may have picked-up the loan. Additionally, the dealer has the option of "kissing the paper" which he may do and might have already done.
 
Last edited:
dogememe said:
The letter is from my local credit union who I am a member with for my bank account and a credit card. That’s who the dealer put the financing with.
Click to expand...
Call YOUR credit union NOW and figure out why. The fact that they're doing this to one of their own members has to mean it's a bad, bad deal. I'd ask them how to make it work, write everything down, and take those terms back to the dealer. Otherwise, as others have said, return the car and walk away. If your credit union can't make it work, the dealer's finance guy WILL find a lender that will write the loan but it won't be the same deal you had on Monday.
 
You must log in or register to reply here.

Similar threads

M
Ever get comped for an oil change?
Replies
4
Views
421
michaelluscher
dogememe
Used EV Tax Credit Issues
Replies
10
Views
616
dogememe
dogememe
How did you find/pick your mechanic?
2
Replies
22
Views
603
JohnB5656
R
Deer and other animals continuously ramming my car
2 3
Replies
40
Views
966
ARCOgraphite
C
what are the dangers of buying a car on ebay
Replies
18
Views
806
wag123
Back
Top