Automotive

Signed contract but 0% financing turned down due to no income but with excellent credit score. Contract still binding?

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  • Aug 23rd, 2021 8:51 pm
[OP]
Jr. Member
Oct 29, 2011
149 posts
16 upvotes
Ontario

Signed contract but 0% financing turned down due to no income but with excellent credit score. Contract still binding?

Title saids it all.
Signed contract to purchase new vehicle.
Applied for the 0% interest free financing.
Excellent credit score but was not approved.
Reason was no income.
Is contract still valid? Or dealer just want the cash?
I am in Ontario.
PS: I have not taken possession of the vehicle.

TIA
52 replies
Deal Fanatic
Dec 20, 2018
7215 posts
6397 upvotes
whizzard wrote: Title saids it all.
Signed contract to purchase new vehicle.
Applied for the 0% interest free financing.
Excellent credit score but was not approved.
Reason was no income.
Is contract still valid? Or dealer just want the cash?
I am in Ontario.
PS: I have not taken possession of the vehicle.

TIA
Contract is null and void because they can't deliver you the car with the payment terms agreed to. They're the ones unable to fulfill it.
[OP]
Jr. Member
Oct 29, 2011
149 posts
16 upvotes
Ontario
Thank you so much for the reply.
I tried to contact the financial agent but heard nothing.
I am relieved to hear that a new contract has to be drafted.

Cheers
Deal Addict
Nov 27, 2013
1597 posts
2255 upvotes
Why would you want to finance a car if you have no income
Deal Expert
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Jul 30, 2007
31892 posts
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Toronto
whizzard wrote: Thank you so much for the reply.
I tried to contact the financial agent but heard nothing.
I am relieved to hear that a new contract has to be drafted.

Cheers
what do you mean ? Are you going to pay with cash then ? Otherwise, leasing will yield the same result as credit not approved.
[OP]
Jr. Member
Oct 29, 2011
149 posts
16 upvotes
Ontario
RaphaelG041 wrote: Why would you want to finance a car if you have no income
Great question.
I am currently looking for work.
I can pay cash out right but since it is 0% interest, i can reinvest that money.
[OP]
Jr. Member
Oct 29, 2011
149 posts
16 upvotes
Ontario
booblehead wrote: what do you mean ? Are you going to pay with cash then ? Otherwise, leasing will yield the same result as credit not approved.
Yes, the other option is to pay cash but perhaps with a better offer.
I think leasing will end up costing more in the end.
Member
Aug 14, 2011
410 posts
152 upvotes
Calgary
You could still provide a co-signor to get the $0 interest.
Financing is always better than paying cash.
[OP]
Jr. Member
Oct 29, 2011
149 posts
16 upvotes
Ontario
booblehead wrote: Consider buying an used one ?
Yes but prices are crazy right now with low inventory.
[OP]
Jr. Member
Oct 29, 2011
149 posts
16 upvotes
Ontario
SAVINGSTAR wrote: You could still provide a co-signor to get the $0 interest.
Financing is always better than paying cash.
Yes good point, a co-signor could get me that loan.
Deal Addict
Nov 27, 2013
1597 posts
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whizzard wrote: Great question.
I am currently looking for work.
I can pay cash out right but since it is 0% interest, i can reinvest that money.

Thing is "0% financing" doesn't exist. No one will lend you money for free. When manufacturers advertise 0% financing they usually offer to chose between the 0% or a "cash discount". The equivalent of this cash discount is often pretty close to the amount of interest you would pay on a 5% loan for 6-7 years.
So what that means essentially is that all the interest for the loan term is prepaid and tacked on the total price of the car.
Even is the monthly payment is the same you are always better off to get the cash discount and a 5% loan from your bank because the total amount owed will always be less should you decide to sell or trade the car in before its paid off.

If you can pay cash for the car don't get 0% financing. Get the cash discount.
[OP]
Jr. Member
Oct 29, 2011
149 posts
16 upvotes
Ontario
RaphaelG041 wrote: Thing is "0% financing" doesn't exist. No one will lend you money for free. When manufacturers advertise 0% financing they usually offer to chose between the 0% or a "cash discount". The equivalent of this cash discount is often pretty close to the amount of interest you would pay on a 5% loan for 6-7 years.
So what that means essentially is that all the interest for the loan term is prepaid and tacked on the total price of the car.
Even is the monthly payment is the same you are always better off to get the cash discount and a 5% loan from your bank because the total amount owed will always be less should you decide to sell or trade the car in before its paid off.

If you can pay cash for the car don't get 0% financing. Get the cash discount.
Thanks for advice. What you said makes sense. Was not offered any discounts after financing was disapproved. Deal is dead and will continue the search.
Deal Expert
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Mar 1, 2008
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RaphaelG041 wrote: Why would you want to finance a car if you have no income
Same reason people are able to buy million dollar homes despite having no income. Foreign money.
RFD is love. RFD is life.
Deal Addict
Nov 8, 2005
3145 posts
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RaphaelG041 wrote: Thing is "0% financing" doesn't exist. No one will lend you money for free. When manufacturers advertise 0% financing they usually offer to chose between the 0% or a "cash discount". The equivalent of this cash discount is often pretty close to the amount of interest you would pay on a 5% loan for 6-7 years.
So what that means essentially is that all the interest for the loan term is prepaid and tacked on the total price of the car.
Even is the monthly payment is the same you are always better off to get the cash discount and a 5% loan from your bank because the total amount owed will always be less should you decide to sell or trade the car in before its paid off.

If you can pay cash for the car don't get 0% financing. Get the cash discount.
The cash discount is rarely worth it if it's even being offered at all. 0% on 6 years on $40k is going to be worth a hell of a lot more than a $2000 cash discount. Not to mention, there often isn't a cash discount anymore.
[OP]
Jr. Member
Oct 29, 2011
149 posts
16 upvotes
Ontario
geokilla wrote: Same reason people are able to buy million dollar homes despite having no income. Foreign money.
Not in my case but point taken.
[OP]
Jr. Member
Oct 29, 2011
149 posts
16 upvotes
Ontario
tim-x wrote: The cash discount is rarely worth it if it's even being offered at all. 0% on 6 years on $40k is going to be worth a hell of a lot more than a $2000 cash discount. Not to mention, there often isn't a cash discount anymore.
This is how the business world works for better or worse. People using other people's money to get ahead.
Deal Fanatic
Dec 20, 2018
7215 posts
6397 upvotes
geokilla wrote: Same reason people are able to buy million dollar homes despite having no income. Foreign money.
Actually, it's much more common it's just tax avoidance/evasion. All my friends with small/own business have no/little personal income and just buy things in name of company. Eg cottages, rental properties, cars, boats etc

But usually to get personal mortgage, they need to up declared income a year or two to qualify and then can reduce after getting the mortgage. This is pretty common

Think of all the contractors and people in service industry doing same .

Add in retired people who have significant wealth and investments but very little income
Deal Fanatic
Apr 5, 2016
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StatsGuy wrote: Actually, it's much more common it's just tax avoidance/evasion. All my friends with small/own business have no/little personal income and just buy things in name of company. Eg cottages, rental properties, cars, boats etc

But usually to get personal mortgage, they need to up declared income a year or two to qualify and then can reduce after getting the mortgage. This is pretty common

Think of all the contractors and people in service industry doing same .

Add in retired people who have significant wealth and investments but very little income
That's why I'm interested in Conservative's promise to fix the stress test for self employed people. Hopefully this will help self employed people compete better for housing and also help promote more people to go self employed.
Deal Fanatic
Dec 20, 2018
7215 posts
6397 upvotes
bomber17 wrote: That's why I'm interested in Conservative's promise to fix the stress test for self employed people. Hopefully this will help self employed people compete better for housing and also help promote more people to go self employed.
They still need to declare more income even if mortgage stress test is relaxed

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