Financing Fell Through (aka Spot Delivery) Scam

Last Modified: May 28, 2019 by Jeff Ostroff

How the "Financing Fell Through" Scam Works

Lots of people complain to about this scam. It starts when you buy a new car and the "LieNance" manager congratulates you because you got a low APR on your car loan. They hand you the keys and you drive home and start bragging to everyone, because you think it's a done deal. Keep in mind that all finance managers are not LieNance managers, only those who lie. This is just a name I made up for the few bad apples.

Usually about two weeks later the dealer calls you saying "sorry, your car loan application was rejected and you didn't qualify for that low interest rate after all." This is where "subject to financing" clause on contract come back to bite you in the butt. Unfortunately, too many of the car buyers who contact us for help here on erroneously think that once you sign papers and drive off it's a done deal. The finance manager knew exactly what you qualified for before you signed the deal. They let you drive off knowing they were going to call you back later and lower the hammer on you.

Financing fell through

They call this the spot delivery scam because you took delivery of your new car using on the spot financing. This really means you drove off with the car before financing was complete, even though I bet you thought it was complete. Some of our site visitors have told us the dealers used scare tactics, warning the customer they would report the car stolen to the police if the customer does not come back in and resign the new paperwork.

There is no excuse for your financing to fall through, because the car dealer knew what your credit score was when you were sitting in the finance office completing the deal. Historically if a shopper's credit score is above 680, you'll get a low APR. If it's below 680, expect to pay a higher interest rate on your car loan. So why are there so many problems with the dealer's Retail Installment Sales Contract? It's a scam and it's often pulled on people with low credit scores.

There is complicated legal verbiage on most car dealer sales contracts stating "subject to loan approval." This loaded statement means: "The deal is not final, even though you signed this contract." They will then lower another hammer on your head, stating that you need to come back in with an additional $1,000 or more and now and your monthly payments will go up because of the new higher 15% APR. Some car shoppers have told me their APR shot up to 21%.

Dealers easily pull this scam on people with bad credit because they have been getting rejected when they apply for credit at other car dealers or creditors. The dealers know that you have driven the car for 2 weeks. They know you own it and will do anything to protect that ownership. Finance managers enjoy the least amount of resistance from this easily duped bad credit crowd and they figure you'll just pay up somehow.

How to Avoid Falling for the "Spot Delivery" Scam

Education is the best defense against a scam like this, so here's how we can help you dodge this bullet. Don't finance at the dealer, especially if you have bad credit. You should line up your own financing before you ever enter a dealership and compare your financing terms to dealer's best financing that they are offering. By avoiding dealer financing you avoid the scam, end of story. This now takes the car dealer and this potential scams out of the equation. The finance manager cannot hide behind monthly payments because there is no loan; you are paying in full with a check from your own lender. Read our chapter on how to finance your car.

Sometimes the finance manager will play cash flow shell games with you, shifting your APR up or down depending on you buying an extended warranty or VIN etching. If this happens, it's time for you to leave. APR should be based on your credit score, not on what extras you buy.

For customers who lease, dealers sometimes call you a week later and claim they "made a mistake and you need to come back and sign a new contract." Give them the big buzzer on this one. Unlike a purchase, your lease is a contract and once it is signed, the dealer cannot change the terms and they cannot make you undo a contract. Just think, if you tried to get out of a vehicle lease that you just signed, they would come after you in court.

What to do if the Spot Delivery Scam happens to you

This should not be happening to you in the first place if you read our car buying advice. If you got a good price on your car, make that deal sweeter by getting your own instant financing online. If you have a credit score over 680, you can try sites like LightStream and apply online and get approved within an hour. They will FedEx you a check to use at the dealer the next day. Then you'll take it to the dealer to pay for your car. Now you have your own car loan on your terms and more importantly what you don't have is no "financing fell through." If your credit score is not so great and say it's below 650, then you can apply online through companies like Auto Credit Express instead. If the dealer refuses to accept the check from an online lender, you should try to get out of that deal.

Also, if the dealer pulls the Spot Delivery Scam on you, be sure to file a complaint with the Better Business Bureau, let your frustration warn others. You can also file a complaint through your state's Attorney General Web site. They are all aware of Spot Delivery Scams, it's a common complaint. has affiliate relationships with multiple web sites. We are paid referral fees for leads or sales generated from visitors that click on some links or fill out certain forms on this site. Please view our advertising policy page for more information.