What is an adverse action letter mean when financing a car?

I received an adverse action letter from Toyota Financial today, three weeks after driving my new Camry off the lot. I made a $20,000 down payment and financed $15,000 at 1.49% for 36 months, as per the special rate they were advertising. This letter wants me to come into the dealership to change the terms to my financing, as they weren't able to approve me at this rate and terms. What does this letter mean? Do I have to go back to the dealer?

Answer
“An adverse action letter means that you’ve been denied financing by a lender. The Fair Credit Reporting Act (FCRA) requires lenders to send them to applicants.
Although three weeks seems like way too long to decide whether you’ve been approved or not, Toyota Financial still might be suffering from a backlog of applications due to COVID. Just give them the benefit of the doubt in that regard, as many lenders are suffering right now.
As far as returning to the dealership, it’s in your best interest. This may mean that your interest rate goes up to 1.5% from 1.49% or something relatively insignificant. The only way to know for sure is to call or visit the dealer, as well as contact Toyota Financial to see what’s going on.
They should be able to give you the low-down on your application and any changes they needed to make.
Don’t forget that your new car needs proper coverage. Use the free Jerry app to help you find the best deal. Jerry compares rates from the top 50 companies in under a minute, delivering the best deals to your phone.”
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Eric Schad
Answered on Jul 30, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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