Buying your first car can be nerve-wracking, especially when it comes to understanding how car financing actually works.
One Redditor recently shared a troubling story about a car purchase that left them wondering if they’d been misled by a dealership claiming to use a “cuddle system.”
“I just want to know if I have completely screwed myself as a first time buyer,” the post begins. “I had a pre-approval from my bank. I went to a dealership to see if they had anything that would fit my loan specifications.”
According to the buyer, things started normally—until the dealership claimed they could “access” her bank’s pre-approval through what she misheard as their “cuddle system.”
The post added, “They said they did and then asked for my information and the lender (my bank) to access my pre approval through their ‘cuddle’ system. Said it’s approved pending finalization with the bank, gave me keys and had me sign paperwork?”
According to the buyer, she hasn’t received confirmation from her bank that it officially approved the car, and she hasn’t seen a credit pull from her financial institution, only, she said, “from other institutions since they ran pre approvals with other institutions to compare, which I didn’t realize they were doing but ay that’s on me I guess.”
However, the loan term, rate, and payments matched what she expected. Still, “Is this a normal process or have I been f—ed over by a greedy dealership?” she wondered.
The “cuddle system” isn’t real—but CUDL is
The system the dealership mentioned wasn’t called “cuddle” at all. They were most likely referring to CUDL, which stands for Credit Union Direct Lending, or a legitimate financing network used by dealerships and credit unions across the U.S. CUDL allows participating dealers to submit loan applications directly to credit unions on behalf of car buyers, streamlining the process so customers don’t have to visit their credit union separately.
In this case, the dealership may have submitted the Redditor’s information through the CUDL network, but that doesn’t necessarily mean the buyer’s original bank or credit union was the one that approved the loan. Dealers often apply to multiple lenders to find a match.
The Redditor noted that several other institutions pulled their credit, which is consistent with a dealership “shopping” for the loan from different institutions. That’s legal—but it should be clearly disclosed to the buyer.
A commenter on the thread, apparently familiar with the system, clarified: “It’s actually to your benefit, and the dealers, that your credit union is part of their CUDL program. That streamlines the process for everyone. You got the terms you expected and they don’t have to wait for you to come back with a check from the credit union.”
The comment explained that the dealership, not the lender, issues the contract at the time of signing. “If you didn’t get copies of what you signed then call the dealer and ask for it,” it said. “The credit union won’t have you in their system until after they fund the dealer which usually takes a few days.”
So, in the end, the buyer’s confusion is understandable. But while the “cuddle” system sounds suspicious, the CUDL program is a legitimate industry platform. However, red flags remain—especially the lack of direct communication from the buyer’s own bank and the multiple unexpected credit pulls.
