Any Benefit to using VW Finance vs my credit union for Auto Loan?

[Pigeyex]

My 22 year old son has two credit cards in his own hame, and I co-signed for him on a personal loan thru our credit union one year ago to help him buy a used car.  He's made all of his payments on time, handled his cc's very responsibly (has a $1500 CL with Discover and now just got a $6,000 with AmEx!) and his FICO score is 748.

His auto-enhanced Beacon score is 724 (probably since no auto loan showing on his credit yet -- we did the last loan as a personal loan for his car).

He's buying a 2013 VW GTI and is in the enviable position of having both our credit union and FW Finance fighting for his business.  I *will* need to co-sign for him again, as he's been on his job for < 1 year and he only has part-time income as a student (about $950/mo.).

Credit union initially offered 2.74% for 60 mos.

VW offered 2.49% APR but wants me as primary and my son secondary.  My credit union is saying that may cost me in add'l fees when it comes time for my son to refi into his name only in the next 3-6 months.

Credit union then offered to match the 2.49%, and would put my son as primary.

F&I manager at the VW dealership is claiming that there are credit benefits of my son "diversifying" his credit relationships beyond just our credit union, and establishing a relationship with VW Finance.  I'm not seeing where that would make any difference -- auto loan is auto loan, and on-time pmts are on-time pmts?

Please advise ASAP if you can, as i have to pull the trigger on this this morning.

thanks in advance,

Paul

[lincar66]

Don't listen to a finance manager he's a fool he's trying to make money off you and your son take that credit union up on that sweet deal he's 22 years old he has plenty of time to diversify

[Anonymous]

@lincar66 Why on earth would you call someone a fool for doing their job.  The bank that he gets paid to finance auto purchases with offered a lower interest rate than he could get previously.  If anything he did the OP a favor by being good at his job and getting him a great rate to start with and making the credit union match the offer.  I hope nobody comes into your job and calls you a fool.  

As for the original question it is a very good idea to diversify your accounts accross multiple lenders.  Let's say he keeps all of his accounts at the credit union and heaven forbid he gets in a financial bind down the road.  If he were to have credit cards, lines of credit, possibly a mortgage, and auto loans.  If he were to default on any of these loans the credit union would do what they needed to do in order to protect their investments especially if he has all of his checking, savings, and investment accounts with them.

If he were to have an auto loan with another lender and defaulted on it more than likely he could go back to the credit union for future needs because of his banking relationship with them.  Personally if I could get the same rate on an auto loan with a different lender than my primary bank or credit union I would definitely do so...Also why in the world would your credit union charge extra fees because he is not first on the loan?  You are both equally responsible for the loan no matter who signs first or second...Also why didn't the credit union give you the best rate to start with?  Sounds to me like they are the ones trying to tell you things just to get you to finance with them!  Does that make them fools, lincar66?  

[Anonymous]

Surprise with ur son score he can't get loan himself..

[lincar66]

just so you know I work at an insurance company so being called a fool is a compliment compared to the other things I'm called the world is not a nice place get with it

So what your saying is we should all prepare fore BK and have a portfolio of different lenders so we can burn them and the other we can keep.

And now the benefit of getting the loan with the cu over the dealership is with her son making on time payments to them he builds a relationship with a credit union that will them in the future give him a auto loan again no problems and actually help him.

To vw your just a number and they couldn't care less and I bet they have a 0% offer floating around somewhere that he is using and then is rate jacking.

And as far as the credit union maybe the first offer was there lowest rate but because they want him as a customer they dropped it a little lower to match the dealer.

I personally finance my cars with the captive lender and then just refi almost immediatly to get any and all incentives which has built me a very good relationship with Chrysler capital and now they will give me anything I want and I have never made more that 6 payments on any given loan.

And as far as diversifying his portfolio I'm pretty sure the car loan means not to much he can always refi if needed and go and get credit with other lenders.

Personally I would trust a credit union with my child's car loan before a big finance company

[Anonymous]

Hope you went with the credit union!

[Pigeyex]

---

@Anonymous wrote:

Hope you went with the credit union!

---

I did.  I have a 10-year relationship with the guy there who's helped me out more than once, and he was simply awesome once again, meeting me and my son at the dealership last nite to re-do the paperwork just FIVE DAYS AFTER CANCER SURGERY.

Someone was correct above in that he could not offer my son the lower rate unless and until VW Finance offered it, and then he matched it.  Also was willing to put my son primary (this was a TITLE issue, not any fees related to the credit union.  Was going to cost about $150 to remove my name as the primary title holder on the car when my son goes to refinance it into just his name, whereas now they can simply drop me as the secondary was the way it was explained to me.)

Thanks for the feedback.  I do see where there is some benefit to my son diversifying his financial relationships, but in the end we went with loyalty for all this guy has done for our family in the past and even this time.

Pigeye

[Pigeyex]

---

@Anonymous wrote:

Surprise with ur son score he can't get loan himself..

---

His score wasn't the issue.  It was not enough time on his job (< one year) and no previous auto credit (his current loan on his '96 Mitsu was a personal loan for which I co-signed, not an auto loan) and INCOME ($950ish per month) issue:  didn't want more than 21% of his monthly income spent on a car payment, even though as a student he still lives at home with us and has no other monthly expenses.

He's off to a great start with his credit though now.  Primary on an auto loan with a nice 2.49% rate, plus the Discover card (who just last nite gave him some auto-love with a CLI from $1500 to $2000 after he hit six months) and the new Amex ($6,000).

Pigeye

[Pigeyex]

---

@lincar66 wrote:
Don't listen to a finance manager he's a fool he's trying to make money off you and your son take that credit union up on that sweet deal he's 22 years old he has plenty of time to diversify

---

He was a she, and she was actually awesome.  Totally respected my decision to go with my credit union yesterday, and even stayed late to re-do all the paperwork and was an overall joy to deal with.  And to a car dealer's F&I manager, having to blow up a sale you think you made on the last day of the month is NOT a joyful thing!  Yes, they still sold us the car but it was one less loan that she thought she had sold, and one less GAP insurance policy too.  Total class act.

Pigeye

[lincar66]

Okay now I'm interested you called a finance manager a class act what dealer is this I want to do business with them lol.

That is amazing that you found one that actually has your best interest at heart.


And like I said the credit union did offer the lowest rate they just out of the best thing for the kid decided to match the rate credit unions don't jack your rate up they give you the rate you qualify for.