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In reply to the discussion: Wall Street Can Now Disable Your Car When You're Driving on the Freeway [View all]Hassin Bin Sober
(26,326 posts)We refused to take those from certain lenders due to the fact they weren't actual drafts. Like you said, some of the documents were pre-loans. Some required the dealer to jump through all the hoops AND RISK of placing a loan without the reward of a profit. We didn't mind taking a check but once you bounced a check with us you were done.
We had a draft bounce because the borrower didn't provide the lender proof of income in a timely manner. We were penalized for something outside our control.
Btw, some of those drafts came from sub-prime lenders like Household Finance (HFC).
9 times out of 10, I could match or beat an outside bank or credit union and wrap the deal up on the spot. Often times, the customer would get the "wholesale" rate because there wasn't an incentive to mark the loan up to earn "finance reserve" from the lender - it made more sense to write the deal at retention rate and get paid the flat fee (couple hundred bucks).
I've written here a lot about not financing your car where you save your savings/checking. ESPECIALLY CREDIT UNIONS - a credit union is more likely to exercise "right of sett off" and snatch your savings in the event of a default. We learned that in "finance school" - it didn't make sense to me at the time but, after going through the 2008 recession, you see what can happen to good people when bad things happen. Never heard of a foreclosure in my neighborhood before 2008 either.
You live and you learn.