Overhaulin'

Can an interest rate on a car loan be increased after contract is signed?

I just bought a car. went over all the prices and interest rates and i signed the contract. today the car dealership calls me and says that the have to raise the interest rate 3%. this is after i have been driving the car for over a week. Is this legal. can they do that?

Public Comments

1. If you signed a loan with a fixed rate, they shouldn't be able to change the rate whatsoever.
2. It sounds like you signed a contract that was contingent on the financing being approved. This is very common practice with cars. The lender didn't approve the deal so now you have to come back to sign new paperwork which requires a higher interest rate and/or more downpayment. You can just take the car back and call the whole deal off. However, some dealers will charge you fees for the milage or daily rental of the vehicle. If you had a trade in, it's probably long gone from their lot. If you want to keep the car, you can either go sign the new deal or find your own financing. By the way, if you traded in a vehicle that still had a balance due on a loan, double check to make sure the dealer has paid off that loan in full. These are tough times for car dealers and some are putting off paying off those loans. You could get stuck with having to pay the that old loan and not even have the vehicle.
3. Read the legal documents you signed. Does it say they can do this if you don't qualify for the loan? If so, you will need to find your own financing, return the car or accept their terms. This is why you should always find your own financing before you go car shopping.
4. If you signed a 189 year deals
5. Read the contract carefully. If you did "driveaway" financing, there is probably language there to the effect that the whole deal is subject to the lender's approval and/or alteration. Dealers don't do the actual lending; they just shop you around to other lenders.
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