Used Car Purchase help needed

Tax AND license is dependent on the county in which you reside. In California there is a tire fee ($5) and a $45 DMV document fee. With a used car, the fees are slightly different. I'm not on the used car side, but I do recall a smog fee and transfer of ownership fee (both of which are nominal).

Banks like Chase and Wells Fargo have lower rates than current credit unions, just FYI. It's because they have lost so much business to the credit unions, that they have gotten much more competitive.

Also, car registration and contractual obligations require your ssn. If you credit union fails to fund the loan, they have to have a back-up plan. And yes, they may have a lower rate. You have to understand that they will have to pull your credit, even with an approval from a credit union, to make sure you are you and to find alternate financing should your credit union fall through. You cannot expect to leave a dealership with 13K worth of merchandise without a credit check, because loans are not funded instantly when you use a credit union, even if you have a 'blank check'.

Case in point: Yesterday a client with an 817 FICO had a credit union approval for 7.1% I ran his credit and got him 4.1% through a bank, non credit union.
The days of credit unions offering the best rates are coming to an end because traditional banks have lost too many deals to them.

You can email me and I will send you my fax number, and look over the 'deal' to make sure it's legit. Make sure you see the CarFax report before you do anything as the dealer will provide it for you on request.

 

Pentagon Federal Credit Union has 3.49% auto loans. My local CU is at 4.24%. So I wouldn't necessarily say that other financing is lower.

Also, the rate isn't the only thing. You need to know if the interest is simple interest figured on the balance each month or if it's computed using the Rule of 78, which front-loads interest and gives little incentive for paying early. On a simple interest loan, just paying early in the month will reduce your overall payments, rule of 78 it won't. So that lower rate could actually cost you more.

My credit union approves me up to a certain amount and gives me a certificate to give to the dealer guaranteeing financing up to a certain amount. There is ABSOLUTELY NO NEED for a backup plan unless the car is being sold for more than book value, which is easy to check.

You should always negotiate the price, INCLUDING fees, before you talk about financing. I tell them if the price of the car depends on whether I have a trade in or finance with them, I know that they are not being honest about the price. If you don't finance with them, they add extra "fees" to make up for losing the commission on financing. Sorry, I don't think the price of the car depends on whether or not you get another commission.

 

There is always a need for a back-up plan - for the dealer interest. If your 'guaranteed' financing falls through because rates change, your credit app has mistakes or because the dealer and the lender do not have arrangements with one another, can you not see why the dealership would want to protect themselves?

 

NO--my paperwork said this loan is approved up to $xx,xxx.00 as long as the value of the car purchased does not exceed NADA value. To quote from my certificate: "The person named on this pre-approved Loan Certificate has received approval on his/her application for a vehicle loan. This pre-approved Loan Certificate should be considered sufficient to secure the vehicle selected by this individual for purchase. Please extend every courtesy to this valued and qualified member." My loan was not contingent on rates not changing. It was good for two months from the date of the certificate. The paperwork I received stated that the rate would be the one in effect when the loan was disbursed. But there was ABSOLUTELY NO CHANCE that this loan would not be funded. The amount was approved for whatever rate was in effect for the next two months. There was a date that paperwork needed to be in for the promotional rate, but after that I would be charged a higher rate, but it was still approved.

 

Unless the dealer had previous dealings with your finance company, they will need a backup plan.

Why? There is absolutely A CHANCE that your piece of paper is something you printed out on your computer.

I understand your point. I am a consumer as well as well as employed in the automotive industry. But these drafts that credit unions and banks offer cannot be authenticated unless the bank (I.E. Capital One) has made prior arrangements with the dealership.

It is never safe to say that there is 'no chance' that a loan will not be funded. I have seen loan processors mistakenly issue pre-approval drafts and retract the offer when the draft is used to purchase a car. It's rare, but it does happen.

 

Did you get your car? Have you tried Capital One? In that instance, they will refer you to a dealer who WILL NOT pull your credit, because they can verify the draft online.

 

Another reason why dealers pull credit is for identity purposes. I know it sounds stupid but they will verify you are who say you are based on information found in your credit. It goes even further that we will now check your name against a list of known terrorist and people of the sort. This is all being do to protect the dealership, you have to look at it from there stand point they stand to lose a lot of money if they just roll everyone that walks into their dealership with out knowing 100% that they are going to get their money. For example I sold a car to some people who made a ton of cash and were in the process of buying another home. They were going to be paying cash for the car and wanted to write a check on funds in their checking account. We would not let them take the car until the money has cleared. They went to the bank and got a cashiers check for the amount, even then we called the bank to verify that it was a legit check before we would give them the car. In this case the reason they didnt want us to pull their credit was because they were buying a house and didnt want unnecessary inquiries. At the same time people will get loans form banks that are good for lets say 30 days, so for some reason when the loan paperwork is submitted to the bank for funding the bank wont fund and you need to reapply. Well when you reapply you may not qualify for the loan that you were initally approved for so the dealership wants to get a look at your credit and based on what they see they would like to have a back up plan if you bank dosent go through. And believe me there are a lot of times that people come in with a loan from an online source lets say and they were not completly forth coming when it came to their application. Because of that they bank has the right to decline the loan even after it has been approved. So again to protect the dealership they want to have a back up plan. good luck on buying your car.