[blues]

I just bought a wonderful new Pacifica Limited. I had contacted dealers a month ago and one gave me a quote for a factory order that I accepted. It was a decent deal, not as low as some of the ones on this forum, but one I was happy to accept for not having to negotiate a lot.

I had told them from the beginning I would not be financing and would pay by check (I know that this means I am not eligible for some discounts and was willing to accept that). When the car came in I asked if I could come in, pay by check, and pick it up that day or if would need to make two trips. I was told that as long as I set up insurance with my auto insurance that day, I could take it home that same day. This is all in email.

I went in. I did call my insurance and set up coverage. I was told by that agent and the salesperson that since I was buying outright and not financing, there was no need for "gap" insurance.

At the close, I was told I needed to sign a backup finance agreement in case the check wasn't honored. That seemed to make sense to me and they assured me if there was any problem they'd call me before submitting the contract to financing.

Later someone mentioned to me that there is a scam where dealers do this and still submit financing anyway! Would legit Chrysler dealers actually do this? Now I'm worried!

The check has cleared my bank account today, but I see in the paperwork there is only a retail installment agreement and no bill of sale or the like.

Is this normal? Am I being worried for nothing? Or should I start following up now to make sure this is processed correctly (no lienholder, etc). How can I be sure my car has proper insurance? I'm now afraid to drive it! And if I should start checking on things, how should I do that? I'm in California.

It's been over 10 years since I bought a new car. I was all excited and happy about my awesome new Pacifica and really happy with a dealership that made it convenient for me, but now I'm worried instead.

Thanks for any advice!

 

[generaltso]

I've never heard of a requirement for backup financing. Some dealers may require a bank check if it's over a certain amount. My dealer didn't, as I wrote a sizable personal check without issue. Now that your check has cleared, ask your dealer to give you all copies of that financing agreement that isn't needed. You should absolutely follow up on this.

 

[ezdays]

One thing to check is that your title should come back clear, no lien holders. No reputable dealer would submit financing on of vehicle that's fully paid for, so if you title comes back clean, you own the car free and clear. I also paid cash and the dealer didn't care if the check was a personal one, or a bank check. Because the vehicle wasn't actually on the lot, I refused to sign some papers that said I had inspected the vehicle, so I went back the next day with a bank check... my choice, just to create a more complete paper trail. And no, I did not sign a backup finance agreement, but the dealer did do a credit check anyway. They all do and it always drops your FICO score a bit for a while afterwards. Why do you need a credit check, I'm paying cash?

 

[CenTexas]

I recall signing some paper similar to what you describe. I, too, paid cash. It took about 4 weeks for the title to come, but it clearly shows no lien holder.

I supposed you could check the credit agencies to see if they opened finance in your name? Can't believe it would be worth it to a dealer to do that. But then, look at what Wells-Fargo did . . .

 

[generaltso]

Why would they need to do a credit check if you paid in cash? What if you refused? Would they not let you buy the car?

 

[blues]

I'm cautiously optimistic.

Searching on google, I do see a few other folks who have signed such agreements with no problem.

One person (who bought two cars) did have one car paid by check come back with a lien holder and later got it fixed. The second car he paid with cashiers check but even then they insisted he sign a finance agreement and he did. However, that title came back clean. This was a story posted on "Thom Hartmann" program about "buying a new car". You can google those terms to find it.

I did call the dealer today. They do claim it is 'standard' and reminded me they are a very large dealer and wouldn't risk going to jail by submitting the finance agreement if the check for full payment is good.

It's a bit of a bummer that there is a long wait for the title just be sure. It's hard to go from all happy and elated to stressed and worried so fast.

We will likely be buying a second car in the next 6-9 months. I'll be more careful to determine upfront what the dealer requirements are to avoid signing a finance agreement unless I find out there is a track record of happy customers at that dealership doing the "backup financing" arrangement without incident. I actually do understand why a dealer would want protection when accepting a check (or these days, even a cashiers check!) I'd have been more than willing to make two trips to wait for check to clear before taking the car or to go get a cashiers check if I were told that was needed.

 

[BrettP]

Years ago cashier's checks were as good as cash but these days even cashier's checks bounce. To see all the horror stories just search the Internet for cashiers checks + fraud.

https://occ.gov/news-issuances/consumer-advisories/2007/consumer-advisory-2007-1.html

If you sell a used boat, motorcycle, ATV, etc. research this topic and treat cashier's checks just like you would a personal check and DO NOT sign and hand over title until the cashier's check has cleared.

If you call the issuing bank to see if the check is legit for the full amount, never call the number printed on the check...look it up.

 

[dolee7]

bank check

When I bought mine I traded in my 2013 town and country and I owed the difference and told them I would get a cashiers check they said to just put it in my account and write a personal check for the difference which I did. They werent to concerned about it as they didnt cash it for about 2 weeks.

 

[ezdays]

Why would they need to do a credit check if you paid in cash? What if you refused? Would they not let you buy the car?

I ask the same question, but around here, they always do it and you don't know when they do since they don't have to ask you. If I'm paying cash, I don't need to pre-qualify, and either my check is good and my trade-in title is clear or they're not. Somewhere between signing the contract and meeting with the financial guy, he does the credit check. Maybe they're looking to judge how many more options they can push on you or possibly try to slip in that, "finance for a few months then pay it off to get that extra discount".... But, every time someone does a credit check on you, your FICO score drops for a while. That's a known fact and no one can tell you why.

 

[generaltso]

you don't know when they do since they don't have to ask you.

They don't? Isn't there a law to the contrary? If you're not applying for credit, they can't just pull your credit report because they feel like it.

Can Anyone Check Your Credit Without Your Permission? | Credit.com

 

[davidbowman]

I just paid cash for mine (combo of trade in, bank check, and personal check), and signed the same type of form, but it was part of a requirement by, of all things, the Patriot Act. The intent is as another means to run a check on the buyer for National Security interests, but they are not supposed to run a credit check. I guess it's up to the dealer to honor that requirement, but by law that are not supposed to unless you are actually financing.

 

[BrettP]

...I did call the dealer today. They do claim it is 'standard' and reminded me they are a very large dealer and wouldn't risk going to jail by submitting the finance agreement if the check for full payment is good.
...
We will likely be buying a second car in the next 6-9 months...

blues - I think it is smart on your part and a very good thing that you are concerned because it has you talking to them and any mistakes will get sorted out ASAP. When the title does arrive you will be motivated to closely verify the name, address, liens and VIN number. If the title doesn't arrive in 4-6 weeks you will be on top of that too. Now that the check has cleared they do owe you a signed bill of sale on Monday that clearly shows paid in full.


Besides, you are a dealer's 'dream customer' and they will bend over backwards to avoid irritating you or running you off. You are already in their computer as a VIP to attempt to sell another car to very soon. They also know that a customer who can pay cash for a $40-$50K vehicle can also afford a lawyer.


On the other hand, as David points out, the feds are very interested in people who pay cash for expensive cars and especially houses...but only if the money magically appears out of thin air :wink2:

 

[ezdays]

They don't? Isn't there a law to the contrary? If you're not applying for credit, they can't just pull your credit report because they feel like it.

Can Anyone Check Your Credit Without Your Permission? | Credit.com

Good point, I don't remember anyone asking, yet they did pull a credit report on me the last few times I bought a vehicle and paid cash for it. We are retired, and if I can't pay cash for something, then I can't afford it and I just won't buy it. Financing makes no sense when your outgo exceeds your income every month. If I had a steady paycheck coming in, things would be different, but I'm sure every one of those dealers pulled a credit report even knowing I wasn't financing the purchase. I didn't like it, but didn't think it was illegal.

 

[blues]

Update:

I went on vacation so didn't get a chance to bug the dealer for bill of sale. However, I have now received my plates, registration and title. No lien holder listed. So all seems well!