When Does the Auto Loan Start?

Q: I recently financed a used car. I take delivery of the car in a few days, although the financing date starts on the 7th, meaning my first payment is due 30 days from the 7th of this month, even though I do not have the car yet. Is this legal?

Matthew R.

A: Yes, it is legal with your consent. However, the deal is not fully completed until you (the customer) drive off in it. If you decide not to take delivery of the vehicle, ultimately there is no deal. On new vehicles, for example, the contract date may be important to accommodate for factory incentives. This is a logical reason why the dealership wouldn’t want you to sign a new contract with a current date. The incentives may be different and the deal may not end up as you negotiated.

Another reason why a dealership may not want you to sign another installment contract is when the contract has already been cashed and paid by the lien holder. The dealer in this case has to write a check to pay back the contract to the lender only to collect on an identical contract with a current date. It may create havoc for their accounting office and of course delay your registration (license plates).

If you want to change the contract date because you prefer a more suitable payment due date, most lenders will let you change the due date after you make your first payment. A per diem interest charge may be applicable for the days that you move back your payment due date.

Ultimately, you should discuss your concerns with your dealer and your dealer should give you an acceptable explanation on their position.

Agustin Vasquez Jr. – General Manager, Mack Massey Chrysler Jeep Dodge, El Paso, Texas