Thanks to my 2012 “Unwinding a Deal” column, I’ve become sort of a car-buyer whisperer. Either my editor needs to retarget his search engine optimization efforts or there are a lot of car buyers who want out of their deal. The majority of the 300 comments the column has received from consumers tells me it’s the latter.

By far, the No. 1 question I receive is: Can I get out of my deal if the dealer did not collect the necessary stips (pay stubs ranking the highest, followed by unremitted down payments) before I took delivery? And while I’d never roll a car without collecting the necessary stips, I understand the logic behind it: Deliver a vehicle — even before the stips are collected — and you take the customer out of the market.

But what happens when the customer can’t produce the stips or they’re unacceptable? That’s right, you get out your gross-cutting pencil and start trimming. But the real danger of not having the stips in hand is if the customer gets cold feet. That was the issue one car buyer brought up in the comment section below my column. He listed his name as Joe, and he wanted to know whether he’d been lied to after the selling dealer refused to unwind a deal on a new truck — even though Joe hadn’t yet provided his proof of income. Here’s what he wrote:

“After some serious remorse, I tried to take the truck back. The dealer refused and said it would basically be a volunteer repo. I hadn’t given them my proof of income at that point, though I was approved by a bank. Nevertheless, since they said there was absolutely no way to reverse the deal, I gave them my stubs. But upon doing more research, it looks like the deal would not have been completed if I hadn’t. Was I lied to? Could they have reversed it?”

I posed Joe’s situation to members of a Facebook group I started for F&I managers. And, well, there were a few key themes in their responses:

  1. Better Safe Than Sorry: Many of my industry brethren agreed that delivering a vehicle before stips are collected is the easiest way to get burned. Some of them rightfully pointed out that it is much easier to get a customer to hand over documents before they have the vehicle.
  2. Process Is Key: Spot deliveries are all well and good, just as long as you inform your customer of your requirements and their obligations. As one F&I manager said, “The customers here know the drill, and we drill it into them if they don’t.”
  3. Lenders Are Frustrated, Too: One lender rep on my page made it clear where she stood on the issue: “Do not send in a deal without everything and then blame the lender when it takes more than four days to fund the deal.”
  4. Avoid Legal Landmines: It pays to familiarize yourself with the laws in your state. In many states, one F&I manager noted, it is unlawful to repossess a vehicle once it is delivered — even if the customer has failed to produce the required stips.

Remember, the dealer is the originating creditor, and as such owns the contract rights until it is sold to a bank or finance company. In Joe’s case, although he hadn’t submitted proof of income, the F&I manager still could have continued submitting his application to other finance sources until he found one willing to buy the contract as it was originally written. The dealer could have also collected payment as per the terms of the contract.

But to answer Joe’s main question: Yes, the dealer could have unwound the deal the next morning. However, buyer’s remorse isn’t usually a valid reason to unwind a car deal. Both Joe and the dealer signed binding documents, and as such, the dealer was simply asking Joe to fulfill a requirement by producing his pay stubs.

But Joe’s situation is why I won’t roll a car unless the stips are in house. There’s just nothing more nauseating than a customer wanting out of a deal before they’re collected. Heck, I’ll even fax over a questionable stip to the funder just to be safe.  

This is a tough business and sometimes we’re called upon to do the near impossible. But being smart will keep us off the evening news and far away from dealers that engage in yo-yo financing. Good luck and keep closing!

Marv Eleazer is the F&I director at Langdale Ford in Valdosta, Ga. Email him at [email protected]


Marv Eleazer
Marv Eleazer

Finance Director

Marv Eleazer is the finance director for Langdale Ford in Valdosta, Ga.

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Marv Eleazer is the finance director for Langdale Ford in Valdosta, Ga.

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