THE TOUGH CUSTOMER- Credit hunch: Camry-buyer's loan burned by dealer inquiries

The day after a fire destroyed her 1992 Camry [November 13: "Fire starter: Incinerated Camry extinguishes beliefs"] back in April 2008, Colleen Miller called USAA to cancel her insurance.

Miller, who knew she would need a new car, was pleasantly surprised to also hear that USAA pre-approved her for a loan of up to $50,000 at an annual rate of 5.39 percent.

Meanwhile, as the debate between Miller and Brown Automotive Group over blame for the Camry fire hit an impasse, Brown made Miller a "goodwill offer" on a replacement vehicle in an effort to resolve the dispute.

On June 18, Miller agreed to buy a 2000 Honda Civic.

Miller planned to close the deal a week later, after she returned from a planned vacation to Florida. She told the Brown salesman she was pre-approved for a loan, but provided him with her social security number solely, she says, for the purpose of establishing her FICO score, in case a better loan could be found.

Miller alleges that unbeknownst to her, the dealership submitted at least seven applications for a car loan in Miller's name at that time.

When Miller called USAA one week later, on June 25, to get her loan, she was shocked to be rejected because, she was told, of the large number of recently submitted loan applications now on her credit report.

By this time, Miller alleges, the dealership was exerting a lot of pressure on Miller to close the sale and hinting they could not hold the car for her much longer. Unsure of what happened with her credit, Miller agreed to allow Brown to finance the purchase at an APR of 12.64 percent.

It was only later, Miller says, when she found out about the Brown applications.

Jay Malone, Sales Director of Brown Automotive Group, emailed me that Brown "had permission from Ms. Miller to try and obtain a loan," and "in shopping to try to get her the best rate, we sent her application to a number of lenders."

Miller is adamant that she did no such thing. Her fiancée, who accompanied Miller throughout the process, supports her story.

In subsequent conversations, Malone told me that that the written permission Brown had was undated, so he does not know when it was given. Miller says that she was provided with a copy of every document she signed, and the only one that authorizes Brown to make credit inquiries is the sales contract, which is clearly dated June 25, 2008.

Even so, Malone insists Miller gave Brown verbal permission to apply for the loans on June 18. 

Brown's Finance Director, Chris Mason, wrote an undated letter, apparently to all three credit reporting agencies, stating that Brown "inadvertently submitted" seven loan applications for Miller "due to a misunderstanding on the part of one of our employees."

Mason's letter also states Brown had "a signed application for credit" from Miller, but doesn't expressly state that it had a signed application at the time Brown applied for the loans. 

Although Malone had initially said all the applications were appropriate, "Knowing [Miller] was upset about [them], we sent letters to the credit reporting agencies asking them to remove the inquiries." Malone claims the reference to "inadvertent" applications and a "misunderstanding" in Mason's letter related only to the number of applications, which should have been fewer.

Malone says, apparently correctly, that these applications would not have affected Miller's FICO score, but Miller says she was clearly told by USAA that the many applications were the reason for her rejection, and indeed, a letter from USAA explaining the rejection includes as one of the stated reasons, "Too many inquiries last 12 months." 

The Brown applications were the only applications on Miller's report.

From where I sit, it seems that Miller's Camry is not the only thing that may have been burned here. While there are clearly factual disputes between Miller and Brown, Brown's own explanations are inconsistent with one another and with their own documentation. And somehow, between June 18 and June 25, Miller went from having a pretty good loan to having a pretty costly one.

Given this, Miller hopes Brown will review her entire situation carefully and see whether fairness requires a further adjustment in their transaction upon which these parties can agree.

Got a consumer situation? Call the Hook newsroom at 434-295-8700x405 or e-mail the Tough Customer directly.



My guess is that dealers do this frequently. I bought a car in 12/2007 and the dealer insisted on getting my SS number. I protested (I was a cash buyer), but finally agreed after writing DO NOT SUBMIT A CREDIT CHECK IN MY NAME on their "documentation". I found out they ran one anyway, but was so sick of the dealer experience that I let it go.

This is typical behavior and why columns like this one are such an important part of the community. I assume Browns is reading this and so I will state for the record that I will never set one foot in their dealership again. Just wait until charlottesviille discovers the sight for this town and the rants section. These people might just learn some ethics in the future.

The sad truth is you really don't want to buy a car from Charlottesville, go to Midlothian or Waynesboro instead.

Several things don't hang true about this story.

First, the USAA pre-approved loan was clearly for a new car: the terms of the loan were $50,000 at 5.39%.

Colleen Miller ultimately reverted to USAA with an actual loan request for about $8,000 (2000 Honda Civic) on a very used car (8 years old).

It sounds like USAA reconsidered, and then scrambled for an explanation - which in typical USAA fashion led to demonizing Colleen Miller.

USAA reneged by blaming her for submitting too many credit enquiries.

Blaming the member - villainizing "the USAA member" - is standard USAA.

So all that remains is to ask and determine the real reason(s) why USAA reneged on the loan offer.

The most likely explanation is that USAA couldn't incorporate the $8,000 loan on an 8-year old used Honda into USAA's CDO (Collatoralized Debt Obligation) offering de jour.

And rather than simply admitting the problem to Colleen Miller, USAA blamed it on "her" conduct.