Need some quick loan advice.

[Jeepn’]

Yup, but the bank might want a teller’s check or cashier’s check at that dollar amount.

Thank you!

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[LooselyHeldPlans]

The credit union will not give you a check. If you go with them they will pay the dealer directly.

Not all. Pen Fed sent me a check.

 

[Opus]

This thread is becoming "sticky" worthy. Lot's of good advice and experience from people who have had different finance issues.

 

[Jeepn’]

This thread is becoming "sticky" worthy. Lot's of good advice and experience from people who have had different finance issues.

Yeah I didn’t expect some of the responses. Thought it would die after one or two replies lol.

 

[Whaler27]

That seems very odd the dealers get into the loans at all. Around here, all dealers have a finance department but it’s just someone who shops your credit app to one of the big national banks they contract to. The bank that gives you the loan will kick back a finders fee to the dealer but ultimately you, the customer, are dealing directly with the big bank. Dealer is out

Dealerships don’t offer ”finance shopping” as a customer convenience…

Financing is a profit center for ALL dealerships. Twenty-three years ago I took a short break from my career and went to work for a boat manufacturer. At that time people with good credit were paying about 10% on long-term (10+ year) loans on boats and RVs. When we went to boat shows we had an F&I guy set up to get people financed on the spot. The bank accepting the loan would pay the boat manufacturer/dealer 1% of the loan amount for every quarter-point between our buy-rate and the rate the buyer was financed at. Our buy-rate was 6%, and the vast majority of buyers were financed at 9.9%, so the banks would cut us a check for 16% of the total amount financed. At a large show like the Portland boat show, that check was usually between $200,000 and $300,000, but if a buyer paid off the loan or refinanced within the first couple years some of the seller’s fee was subject to recovery.

 

[JSFoster75]

So I believe my credit union is at 5% at 60mo. I’ve seen dealers ask for an opportunity to beat or match rates. How exactly would that work? Would my credit union send me a check and if the dealer beats it I don’t cash it?

Sorry if it’s a dumb question. I’ve always gone with the dealers bank, never done credit union or had them compete for business so I’m not entirely sure how to go about it.

Every place is different, but you can just get a written quote from the credit union to show the dealership.

As far as dealing with the credit union, they can either work directly with the dealership, or you can get a signed copy of the dealership and they will make the check payable to the dealership as shown on the deal worksheet. Then you just take that to the dealership to pay for the vehicle.

 

[JSFoster75]

Very interesting way of doing a loan. Here, no dealer ever gets into the loaning of money. Back when I had to borrow money to buy new your choices were your bank or the manufacturer loan program. Ford Motor Credit, GMAC. I am not sure what Chrysler had. Those all collapsed when the manufactures had to get the US Government to bail them out to the tune of billions some 15 years ago. Now it is all done through the banks. No dealer themselves actually uses dealer money for any financing. Dealers here just sell vehicles.

Ford was the only one to reject the bailout money that the government tried to force them to take...

 

[JohnsWilly]

So I believe my credit union is at 5% at 60mo. I’ve seen dealers ask for an opportunity to beat or match rates. How exactly would that work? Would my credit union send me a check and if the dealer beats it I don’t cash it?

Sorry if it’s a dumb question. I’ve always gone with the dealers bank, never done credit union or had them compete for business so I’m not entirely sure how to go about it.

Be clear that the dealer needs to significantly beat the credit union rate. I tried that approach once and they “beat” my CU rate by a tiny fraction with some unknown credit union I had to join to get the loan. After that experience, I am VERY clear about what they need to do to beat my credit union rate.

 

[dcmdon]

In a situation like this, had they beat your rate would you just shred the check and tell the CU never mind?

Yes, this can be done and is common.

Though I hate to waste the time of a company that is willing to give me a great rate right off the bat, just to go with someone else.

If I'm going to ask a credit union (remember they are a non-profit, any excess profits are distributed to the members) to put time, money and effort into funding a loan for me, I'm going to let them make money on it.

Bottom line. Tell or show the dealer what the CU can do. If they dont' beleive you, then great. Finance with the CU.

 

[dcmdon]

One other benefit of staying with the CU is that they hold and service the loan. That means they will be easy to deal with and will be easy to reach if you have questions.

So unless the dealer beats the CU by a quarter point or more, I would go with the CU.

 

[dcmdon]

I used to be a lender, I have several posts on here from a few different banner accounts about how F&I (Finance & Insurance) people are the scum of the earth. They are generally one of the highest paid employees at the dealership. As others have said, buy rate sell rate etc, we just called it a bump. We allowed our indirect dealers to bump up to 3%. Then the F&I will sell you a $1000 GAP policy when you have 20% equity in a vehicle and take a 4 year loan. They’re really terrible people who do not care an ounce about the customer.

At the CU I worked at, we offered something called the 2% solution. 2% lower than your current rate (or better if our rate sheet was better) at the same term down to a floor of prime (3.25% at the time). So my recommendation was always get the loan at the dealer then do the 2% solution andpiss off the F&I guy when they get the charge backs.

I worked F&I at a local small town "good guy" dealer. Sure we made money, but we never ripped people off. The owner was a member of the community and had to face his neighbors every day.

But one day, after I left the business, a coworker asked me to take a look at her car loan paperwork.

I had heard about dealers like this but had never seen a deal like this. This was 20+ years ago and I'm pulling number from my head, but here it goes.

She bought an Accord with an MSRP in the 20 k range. She had a trade they showed her $5k for. (who knows what ACV was but it doesn't really matter.

To that they added AD&D (Accidental death and dismemberment - you don't want your loved ones on the hook for your car if you die . . .do you??), Gap, a 3rd party service contract, and an 11% rate at a time when the market rate was in the 3s or 4s.

The sum of her payments over the 5 years of the note was over $30k plus her $5k trade. Insanity.

After I saw this, I mentioned to my old boss, the owner of the dealership the deal I had seen, and he laughed. "Yeah, we make good money. But if you are willing to screw people you can make a ton of money.".

In our case, we could make a decent buck selling loans at competitive rates that still got us decent money from the finance company. Sometimes GMAC would offer 0% so we just got the spiff for selling that loan.

 

[Whaler27]

I prefer not to finance stuff anymore, because I’m old and consumer debt makes me anxious, but when I was still financing stuff I’d tell the F&I guy something like, “I’m going to finance 70% of the purchase price over four years and I have a Beacon score of 810. What is your best interest rate?“ (Providing my credit score makes it unnecessary to provide my social or run my credit unless or until I accept the terms and actually financed through them.)

What the dealer wants, of course, is to be the last one to take a shot at your business, so they know the mark they have to beat. It’s the same game when it comes to purchase price — because they don’t want to give up more margin than it takes to earn the deal. That never struck me as very fair or sporting, so I’d tell them and everybody else to give me their best rate and I’d take the best deal, without working one against another. Usually the differences were pretty small — super small when translated to actual monthly payment. This approach undoubtedly cost me a few dollars, but very few, and it was painless and didn’t reward cheesy behavior. The vast majority of the time the local credit union won — and I was good with that, as it felt like I was keeping some of that money local.

 

[Danu924a]

So I believe my credit union is at 5% at 60mo. I’ve seen dealers ask for an opportunity to beat or match rates. How exactly would that work? Would my credit union send me a check and if the dealer beats it I don’t cash it?

Sorry if it’s a dumb question. I’ve always gone with the dealers bank, never done credit union or had them compete for business so I’m not entirely sure how to go about it.

I never trust dealer financing. Too much room for shenanigans. But that’s just me.

 

[dcmdon]

I never trust dealer financing. Too much room for shenanigans. But that’s just me.

If the dealer's rate is better than other sources, then it's better. There's nothing they can do otherwise.

 

[Danu924a]

If the dealer's rate is better than other sources, then it's better. There's nothing they can do otherwise.

I’ve seen shenanigans tho

If the dealer's rate is better than other sources, then it's better. There's nothing they can do otherwise.

Mathematically yes. My point is make sure it adds up to be what they say. Nothing was added in. Early payment penalty ? Different total price if you use their financing? I actually had a GM guy try to squeeze the difference of my trade-in that he didn’t want to give me. Shenanigans

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