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Old 04-30-2014, 05:17 PM   #1
Nmullin11
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I recently financed a new Wrx and the sales guy talked me into getting extended warranty for 1500 and he would lower my apr to 2.59 opposed to 3.79 w/out the warranty.

I called today to cancel the warranty because car will be modded and don't know of any dealers in my area that will replace parts under warranty when car is modded.

He said he had to pay a fee or buyback to the finance company in order to get the rate lower and that if I wanted to cancel it he would have to take that fee out of the 1500.


Is this total bs or an is he tellin the truth?

I thought if I was approved for 2.59 it wouldn't matter if the loan was 15000 or 16500.


Any insight from people with knowledge of this is appreciated.

Thanks!
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Old 04-30-2014, 05:19 PM   #2
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Btw I financed with chase through Subaru.
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Old 04-30-2014, 05:25 PM   #3
thuanvinhny
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I have no knowledge in this, but I can give you what I think. The financial people can adjust your interest rating.

Say, normally you would be qualified for 0.9%, the Financial Manager then will raise it up to 3.3% he will eat and pocket the extra from the Banks, and that is their jobs.

Then I would look from that basic point of view and say he is B-Sng you. But it will be real tough now for you to back out of that, proving the paper works.

Unless you sweet talk to him, or give him a reason to believe that he can have your business in the future again. FE, please take it off, I trade my car in very often. This may be the first time I purchase it from you, but trust me, be good with me, and you will see me in a couple years for an upgrade trade-in.

gluck
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Old 04-30-2014, 05:27 PM   #4
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When you buy a house, you have the option to pay points to give you a lower interest rate. Same thing is happening here. He paid a fee that is likely "included" in the price of the warranty so that they can make that deal.

What kind of loan are you getting that you're paying that high a percentage anyway? My bank has the following rates:
https://www.dcu.org/loans/auto-loans.html

I'm sure you can find better if you don't go through the dealer.
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Old 04-30-2014, 05:33 PM   #5
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Quote:
Originally Posted by Loyale93 View Post
When you buy a house, you have the option to pay points to give you a lower interest rate. Same thing is happening here. He paid a fee that is likely "included" in the price of the warranty so that they can make that deal.

What kind of loan are you getting that you're paying that high a percentage anyway? My bank has the following rates:
https://www.dcu.org/loans/auto-loans.html

I'm sure you can find better if you don't go through the dealer.
oh wow, 1.24% interest rate sounds good. Looks like you have to be a customer with an existing checking account to get that rate though.

And I thought Capital One was a good deal. They have 2.39% interest rate.
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Old 04-30-2014, 05:35 PM   #6
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Originally Posted by Loyale93 View Post
When you buy a house, you have the option to pay points to give you a lower interest rate. Same thing is happening here. He paid a fee that is likely "included" in the price of the warranty so that they can make that deal. What kind of loan are you getting that you're paying that high a percentage anyway? My bank has the following rates: https://www.dcu.org/loans/auto-loans.html I'm sure you can find better if you don't go through the dealer.

Car has been financed already and is in my possession. I may refinance through dcu when I go home to nh but right now I'm in virginia and there's no local branches. 2.59 isn't that bad for me tho. I'm 22 with a 660 my fico and not the longest credit history. However I've had no late payments and pay bill in full and all my cc recently got credit line increases. Seemed to happen right after I got the car. Coincidence or not, idk.
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Old 04-30-2014, 05:53 PM   #7
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First, don't talk to the salesperson.

Next, call Subaru or whoever is listed on the warrantee....even a different dealer. Lose the warrantee. Period.

The sales person is full of crap.

Call DCU. Set up an account. Get 1.24%. Go here: https://www.dcu.org/loans/auto-refinance-loan.html

You can put in your info to figure out the rate. They don't put actual fico scores, but you can call them and ask. 1.24% is on a refinance!

Open an account with them. I've been a member since 1980 and their CEO is the dad of one of my son's best friends. Why wait till you're in NH? They have an 800 number. I used to live in Virginia and so I know they have telephones down there.
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Old 04-30-2014, 06:02 PM   #8
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I was about to say the same thing as Loyale93 but seeing how you have 660 credit score and are 22 that's probably why your rate is higher.

The finance guy at Heubergers initially quoted me 2.89 to which I immediatley laughed at and said "umm I have a much better rate lined up already". He asked me the rate I was quoted at (1.79 through Navy Federal) and he said "oh there are 2 more banks who haven't came back with a rate yet, give me a sec....a little longer...ah here's one at 1.89 for 63 months".

Pretty sure it was a BS tactic to get me to agree to the crappy rate off the bat with him making the assumption that I was ignorant of what I can qualify for. I ended up taking the 1.89 through them since it was easier & faster than doing the Navy Fed loan.

I'm pretty sure there is absolutely NO connection to the extended warranty and the loan rate you were quoted. I didn't take a single one of the things they offered (although the pricing on the windshield/door ding/key thing wasn't bad at all), but I did call back to get him to add GAP insurance to my loan in the case that the car gets totalled in the next 5 years. It added $400 to the total price of the car but that is a pretty good price from the research I've done.
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Old 04-30-2014, 06:28 PM   #9
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I can cancel my warranty at any Subaru dealership and they will take it off the principal of the loan? Or will they give me a refund check?

Thought I had to go through the dealer I financed through?


I will try this tomorrow at some dealers here in VA and once I get it off the loan I will refi through dcu.
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Old 04-30-2014, 06:30 PM   #10
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Quote:
Originally Posted by Nmullin11 View Post
I recently financed a new Wrx and the sales guy talked me into getting extended warranty for 1500 and he would lower my apr to 2.59 opposed to 3.79 w/out the warranty.

Thanks!
What he did is and was ILLEGAL (in VA at least). You can't force someone to buy product by lowering the apr. He gets paid on any rate bump, the bank approved you at say 2.25, and he bumped it. He said he'd cut it back down if you bought the warranty bc he gets paid on that. HIGHLY illegal to do that. Tell him you're going to report him to the GM/Owner, and also the police, and I can guarantee you he'll cancel your warranty asap.

Tell him if he doesn't cancel your warranty asap, and give you the full refund, you'll not only cancel the warranty but re-finance the car with your credit union (he'll lose his finance money, too)

Warranties and finance companies are totally different entities, and by federal law, a finance company can't approve you with a condition of GAP, warranty, credit life, anything.

http://www.autocheatsheet.com/car-de...aler-scam.html
"Payment Packing becomes illegal once:

The dealer has obtained and reviewed a credit report on the car buyer.
The sale price has been disclosed to the customer.
The term of the loan has been disclosed.
The finance rate has been disclosed."

Pretty much sums it up....

You can call SOA, complain, when you get the subaru customer satisfaction survey, report it on that. Dealers holdback is based on the customer sat score....if they fall below xxx amount, they will lose tens of thousands, in some cases hundreds of thousands. THIS is why they almost force you into giving them all 10's
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Old 04-30-2014, 06:42 PM   #11
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What he did is and was ILLEGAL (in VA at least). You can't force someone to buy product by lowering the apr. He gets paid on any rate bump, the bank approved you at say 2.25, and he bumped it. He said he'd cut it back down if you bought the warranty bc he gets paid on that. HIGHLY illegal to do that. Tell him you're going to report him to the GM/Owner, and also the police, and I can guarantee you he'll cancel your warranty asap. Tell him if he doesn't cancel your warranty asap, and give you the full refund, you'll not only cancel the warranty but re-finance the car with your credit union (he'll lose his finance money, too) Warranties and finance companies are totally different entities, and by federal law, a finance company can't approve you with a condition of GAP, warranty, credit life, anything. http://www.autocheatsheet.com/car-de...aler-scam.html "Payment Packing becomes illegal once: The dealer has obtained and reviewed a credit report on the car buyer. The sale price has been disclosed to the customer. The term of the loan has been disclosed. The finance rate has been disclosed." Pretty much sums it up.... You can call SOA, complain, when you get the subaru customer satisfaction survey, report it on that. Dealers holdback is based on the customer sat score....if they fall below xxx amount, they will lose tens of thousands, in some cases hundreds of thousands. THIS is why they almost force you into giving them all 10's
Hmm, so what loyale93 said is incorrect then? That doesn't apply to auto loans? Kinda confused on if I should play hardball and tell him I'm gonna complain to SOA or not.
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Old 04-30-2014, 06:46 PM   #12
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Quote:
Originally Posted by Nmullin11 View Post
I can cancel my warranty at any Subaru dealership and they will take it off the principal of the loan? Or will they give me a refund check?

Thought I had to go through the dealer I financed through?


I will try this tomorrow at some dealers here in VA and once I get it off the loan I will refi through dcu.
You got your paperwork regarding the loan and extended warranty right?

They usually let you cancel the warranty at any given time, but it is in the fine print whether or not this is true.

I would call the warranty company and/or finance company directly rather than deal w/the finance guy at the dealer.
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Old 04-30-2014, 06:51 PM   #13
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No it doesn't apply to auto loans. You can't "buy" down an auto rate. Some banks or credit unions will say "if you have over 20% equity in the car, we'll knock off .5%", meaning if your down payment and trade = 20%, you're good. But again, you can't tie in the purchase of another product with lowering the rate. Plus, adding more costs would lessen your equity in the car anyway...

The dealer didn't "pay a fee". They get your approval sheet saying nmullin is approved for $30,000 at a buy rate of 2.09%, with option to bump up 2.5% (hypothetical numbers). For each point he bumps up, he gets paid a fee. He told you if you buy the warranty (which markup is usually at least double), he'll knock off a point or 2 from the apr. So, he still got paid on the apr, and also now got a huge payday on the warranty...

This is the main reason why you want to use a credit union, walk in with a blank pre-approved check, and walk out. You can also always negotiate any product they offer...warranty, maintenance, etc. They get a bonus based on their penetration of a certain product, so they'd rather you pay only 100 over invoice as opposed to letting you walk out without purchasing anything.
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Old 04-30-2014, 07:14 PM   #14
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I am getting 2.49% on a 72 month loan and my FICO score is 804.
I call BS on that loan. You should be able to cancel the whole loan and the warranty and refinance somewhere else at the same rate or lower.

Look at the paperwork.
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Old 04-30-2014, 07:22 PM   #15
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What are all of you guys, lawyers or something? I severely doubt the dealership would have done something that was illegal in any form or fashion. They and the banks are able to set the rates at whatever the hell they want.

On top of that, you can't "cancel a whole loan" once you've signed the paperwork and taken delivery, unless it specifically states somewhere in your paperwork that there's a return policy on the car, you're stuck with it.

The only option you really have is to look through your warranty paperwork, hope it isn't from the dealer, and see if you can call them directly to have that portion cancelled and returned to you.

I would suggest that you live with the fact that you got suckered into a warranty, cross your fingers you'll need it one day, hope it comes in handy, and carry on with whatever buyer's remorse you have at this point.
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Old 04-30-2014, 07:26 PM   #16
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I am getting 2.49% on a 72 month loan and my FICO score is 804. I call BS on that loan. You should be able to cancel the whole loan and the warranty and refinance somewhere else at the same rate or lower. Look at the paperwork.
That's what I'm thinking. I just have to tell this snake finance guy that I'm not paying his imaginary fee to cancel the warranty when I was approved for the 2.59 in the first place I guess. If he says he won't then I'll have to threaten him with talking to his manager and leaving bad scores on Subaru survey. Hopefully it works!

After I get rid if the ripoff warranty I will work in refinancing.
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Old 04-30-2014, 07:29 PM   #17
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Originally Posted by Nmullin11 View Post
That's what I'm thinking. I just have to tell this snake finance guy that I'm not paying his imaginary fee to cancel the warranty when I was approved for the 2.59 in the first place I guess. If he says he won't then I'll have to threaten him with talking to his manager and leaving bad scores on Subaru survey. Hopefully it works!

After I get rid if the ripoff warranty I will work in refinancing.
Your warranty is likely through someone who is not the dealer. Look through all of the paperwork you got on the warranty and see what the cancellation clauses are with them. Figure out what number to call and see what you can do to cancel it through them. That's going to be your best bet.
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Old 04-30-2014, 07:30 PM   #18
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What are all of you guys, lawyers or something? I severely doubt the dealership would have done something that was illegal in any form or fashion. They and the banks are able to set the rates at whatever the hell they want. On top of that, you can't "cancel a whole loan" once you've signed the paperwork and taken delivery, unless it specifically states somewhere in your paperwork that there's a return policy on the car, you're stuck with it. The only option you really have is to look through your warranty paperwork, hope it isn't from the dealer, and see if you can call them directly to have that portion cancelled and returned to you. I would suggest that you live with the fact that you got suckered into a warranty, cross your fingers you'll need it one day, hope it comes in handy, and carry on with whatever buyer's remorse you have at this point.
Huh, everyone has such mixed opinions. I'm canceling the warranty either way. It's through Subaru and the finance guy said he can cancel it but there will be a fee I have to pay that he supposedly payed to get me a lower rate. Idk....
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Old 04-30-2014, 07:31 PM   #19
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Your warranty is likely through someone who is not the dealer. Look through all of the paperwork you got on the warranty and see what the cancellation clauses are with them. Figure out what number to call and see what you can do to cancel it through them. That's going to be your best bet.
The warranty is through Subaru, it is valid at any Subaru dealer in the US.
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Old 04-30-2014, 07:35 PM   #20
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Huh, everyone has such mixed opinions. I'm canceling the warranty either way. It's through Subaru and the finance guy said he can cancel it but there will be a fee I have to pay that he supposedly payed to get me a lower rate. Idk....
Call whatever number is on your paperwork and cancel it directly through Subaru.

This is a forum of everyday people who have opinions. The dealer is a multi-million dollar business that can afford more and better legal counsel than anyone here. It is a ridiculous proposition to insinuate that they are intentionally doing something illegal.

However, it is very possible that Subaru as a company offered the APR discount for you to buy said warranty, so you might be up ****'s creek. I still think you should accept that you got suckered in and not even bother with the whole thing. You're talking about 20-25 bucks a month here - in which you're never really going to see back anyway.
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Old 04-30-2014, 09:14 PM   #21
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THe extended warranties can usually be cancelled in something like 30 days for a full refund. Since you financed the car, you would get a refund check.

As far as him giving you the lower rate to buy the warranty...that's b.s. He locked you into the rate, and he took a gamble. If you want to cancel the extended warranty, that's up to you and the dealerships loss.

Now, they may charge you a nominal fee...Maybe $50 give or take...but certainly nothing really much more than that. If you have any questions...feel free to call another dealer and pick their sales mgr's brain and tell them what happened. They'd be happy to know what kinda scams other dealers in town are pulling in order to make the sale.

BTW, I used to sell cars at 3 different dealerships. I am the expert. I know everything. I am never wrong...etc. =P
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Old 05-01-2014, 12:26 AM   #22
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You have 30 days to call subaru and cancel the warranty. You don't have to go to the dealer.

They may ask for a written letter for the cancellation request.

They will either send you a check or apply it to your loan balance.
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Old 05-01-2014, 06:36 AM   #23
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Originally Posted by Nmullin11 View Post
Hmm, so what loyale93 said is incorrect then? That doesn't apply to auto loans? Kinda confused on if I should play hardball and tell him I'm gonna complain to SOA or not.
What I said wasn't incorrect, so much as it didn't really apply. It's true about the mortgage, just apparently doesn't apply when you factor in a warranty, since it's a different entity, as stated. Good information!!

That said, dealers rarely have the best prices for loan rates.

And asking us if a certain loan rate is good or not (which you didn't) is useless since we are not you, as Gro Harlem pointed out above.
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Old 05-01-2014, 07:04 AM   #24
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Let's review.....the warrantee is through SOA.

The loan (if it's a Subaru sourced loan) is through Chase.

I'm looking very hard to see where a dealer is listed as anything here. I can't find anything.

Why have you not already cancelled through SOA?

Why have you not already called DCU, set up a checking and savings account with a token $100 and asked them for a "real" rate?

Do you like handing over money for no reason?
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Old 05-01-2014, 07:08 AM   #25
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Originally Posted by Jack View Post
Let's review.....the warrantee is through SOA. The loan (if it's a Subaru sourced loan) is through Chase. I'm looking very hard to see where a dealer is listed as anything here. I can't find anything. Why have you not already cancelled through SOA? Why have you not already called DCU, set up a checking and savings account with a token $100 and asked them for a "real" rate? Do you like handing over money for no reason?
I made this post yesterday afternoon and I'm at work now. Plan on calling SOA today after work.

I appreciate all the help guys.

Thanks.
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