Lexus - Cancelling dealer offered options

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Hello Hackers!

I tried to search my answers but couldn’t find the specific information that I am looking for. Hoping you guys can share the valuable insight.

I signed the contract for a 2023 Lexus RX350 yesterday, and it was financed with Chase Bank.

Here are my main questions:
#1 - Do I have to wait until the deal gets funded to call the plan administrator to cancel all those extra stuff? Or Can I cancel it right away?
#2 - Do I also get the sales tax refunded on these extra stuff?

List of extra stuff:
Safeguard Service Contract ( Key lost, battery, headlight kind of stuff ): $1855
Safeguard tire & Wheel - $1941
GAP: $695

Here is the little juicy story, and hoping you guys can share some input on that!

This was my first financed car in USA, and I was hoping that this should have gone smoothly just like every other car transactions I have done so far. I ordered this car a month back, and didnt have the exact date for the delivery, so I was not sure when to take pre-approval from ussfcu, plus Lexus’s website had the published offer of 4.99% rate for 60 months, so I figured out that difference is 50 basis points compare to ussfcu and I will save the time and hassle to deal with ussfcu. Currently I do have two active leases from Lexus in my name, and I signed those two leases last month. So this was my 3rd car within 45 days. Well, this finance guy told me that Lexus financial underwriter needs to know who is going to drive this car. I explained that this would be an additional car for me. Then later he came back to say that Lexus Financial doesn’t want to approve this deal as I do have very thin auto history, and I signed the two new Lexus leases recently. Of course, my auto history is less than a year old but credit history is 13 yrs old, but I have had 3 active leases from Lexus last month and had no issue with the approval last month so I didnt see the problem to add this one. Anyway, I understand that sometimes bank may have the limit for their own risk exposure so they may not want more on their table. I even offered more downpayment like up to 20k, and finance guy said that they still wouldnt do it. As far as my DTI, Credit score - that was not their concern at all.

Well, I asked the finance guy if he would run the credit from a different lender. Initially he said that oh, they may not approve it, then asked me which bank do I want them to run. I asked for the Chase bank since I do have an existing relationship with them. I told the guy if it doesn’t get approved with Chase, then I am going to pay cash for this entire transaction. He said that it will take 30 min to get the approval from Chase underwriter. While I was waiting, I called Chase to increase the 50k limit on my debit card so I could pay the purchase right away without going to the bank for the cashier check. Anyway, the guy came back and said that I got approved at 8.39% with Chase. I said - all right and do it and I will refinance it later.

Anyway, he dragged me so long at the dealership and he was doing other clients as well in between, and they ate my 5 hours to complete this entire thing. This was the most time that I have ever spent at a dealership, otherwise for the leasing transactions, I spent on average 2 hours, and cash deal, 1 hour with the other dealerships.

Now finally my turn comes in the finance office, and he started his traditional sales pitch for the extra stuff. I simply declined it, and said that you can give me 8.39% and I will refinance it later.

Then he did counter offer at 7.89% with his extra stuff - I was not still interested.

he again gave his counter offer at 6.89% with his extra stuff - I declined all that, and said - just give me 8.39% and no extra stuff, and I will refinance it later. Then he made me sign a paper to say that I am declining all the extra stuff.

Few seconds later, he offered 5.89% rate for 60 or 72 months term if I took his extra stuff. And told me if I dont use any of those stuff within 2 years, it will be refunded in full, which I knew that it was a lie. I was already so late plus I had 2 hours driving back home, so I wanted to get out from there faster, and I had no time to review any agreement while I was there. But I knew I would able to cancel it within 30 days, so I said - okay do it at 5.89% for 72 months and gave me his extra stuff.

I am just wondering - was I really denied from Lexus Financial for this finance deal? Or was it their game to play with other lender at 8.39% and then bargain to offer lower APR if I take their extra stuff? I also looked my Experian file and they ran my credit with Capital One as well but the finance guy didnt disclose anything about this bank. All he talked about Lexus Financial and nothing else.

Thank you! :slightly_smiling_face:

1 Like
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Your rate was probably lower and they marked it up :slightly_smiling_face:

Same thing happened with my BIL. We started at 11% came down to 8% and settled at 6.5% after we took the warranty plans. Canceled the warranty 30-35 days after and got refunded

2 Likes
3

Following this good and well written story.

BTW, why do you need three leases at once. It does sound like someone else will be primary driver.

2 Likes
4

One is for me, and 2nd one is for my wife, and this 3rd car was an extra for us. Plus I also like to secure the new car first before I consider to dump any of my active leases.

5

Do you think that Chase rate could go lower than 5.89% for 72 months term. Ussfcu’s published rate is 4.99% on 72 months term. I also checked the Chase’s Auto rate online, and it is listed 6.84%, and even with my CPC discount, it will drop an additional 25 basis points.

Screenshot 2023-06-17 at 10.35.52 AM
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retail (you directly applying with chase) and dealer loans have different programs, so it’s possible the dealer can beat it even with the same bank.

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Makes sense! Thank you! :slightly_smiling_face:

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So what’s the benefit to sell extra items that would be cancelled anyway? Is it for the chance some customers will forget the cancellation?

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Most people don’t end up actually cancelling it. And even then some wait too long and won’t get a full refund. It’s a numbers game for the dealer.

10

Agreements are complex for many people to understand, and many people do see the value for the extra stuff. Average car buyer who may be buying cars once in every 3-5 years, then they like to get every single kind of insurance that will protect their dream toy. These finance guys scare the people like anything. Yesterday the finance guy told me that this agreement will protect the headlight, battery, blah blah. I told him if the bulb goes off, then it might cost up to $100, but instead he said that it will cost $1500 to replace this special LED headlight. Think about all the bad situations that finance guy will tell the car buyer about their new dream toy. I think most people do seem happy to buy their extra stuff plus these finance guys do play the APR game to show the value. After yesterday’s experience, I can understand why the car finance offices do have bad reputation for playing the games. In the past, most of my purchases were straight forward cash and lease, so there was nothing for them to play with me.

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Could be either given you signed 3 leases. But if LFS really do decline you, they are obligated to provide you an adverse action notice. You may still get this in the mail.

1 Like
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Thank you! I will wait for the notice!

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Aaaaand now you know why they had you waiting around for 2 hours and took other clients. One of the oldest tricks in the book.

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With games and social network apps on my cellphone, will the trick still work?

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They actually ate my 5 hours from the time I arrived. Plus I had 2 hours driving back home.

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It would be nice to settle down most details through emails first.

17

If you have anything else going on in your life and have anywhere else you need to be, yes. Works better on people with busy schedules, those who have young children, etc.

After several hours, even watching streaming video and playing games, just about anyone will want to be done with the process and are likely to let their guard down.

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Deal was negotiated via text, and everything was good on that part. I submitted my credit app 1 day prior, plus my Experian score is 780+ plus DTI was very little, and have enough income to finance/lease more cars, so I had no concern if anything would go wrong with Lexus Financial. Prior to coming, I asked the sales rep for 4.99% APR with Lexus Financial and he told me that he doesn’t see the any problem based on my credit score and income.

Plus I have purchased 2 cars from this dealership in the past, and experience was easy and fast. So I was not expecting any surprise from them.

I did what I could do, but yes, I learnt one thing. If I am ever going to do finance a car, then take the pre-approval from my bank prior to going to dealership to sign the deal. This was my first financed car deal, so had no experience about their game on APR.

19

My guess is yes

You said above that you signed for 2 new leases in 45 days so it doesn’t sound like one is near disposition.

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Last month I had 3 active leases from Lexus, and they did not show any concern with the approval, and none of those leases were near disposition.