Cautionary Tale

[NichelleN]

I guess experiences will vary. I just bought a car over the weekend that was financed. I had a pre-approval through PenFed but the dealer beat their rate (I took 2 hard pulls). Before that, the previous 2 cars I purchased were both done as cash sales. I simply told them I had the full payment taken care of. I left the dealership with the car each time before the check was delivered to them. I'd done a nominal down payment ($1k - $2k) and said I would follow up with a check. Both were new cars ($35K for the first, $46K for the second)

When I expressed surprise that I could just take the car, the salesman for the 2nd car basically said 'well, we know where you live'.

That doesn't answer your question specifically on credit union financing, but I thought I'd share for comparison purposes since I had the cars before they received payment.

One more thing - thanks for sharing your story here. It really helps others!

[Anonymous]

Good tips.  Dealers love for folks to trade in their cars.  They need newly used inventory because they can always find a buyer and financing for a newly used car and they love trade ins because they give you a low value so they have profit and get a nice profit on moving a new car.  We never buy any car we are not willing to keep for 5 years, the transaction costs alone make upgrading sooner a bad deal and by commiting to this 5 year plan it forces us to do a great amount of due dilagence before we buy which has led us to being happier with the cars we purchase.  We are 4 years into our current family car and have begun to consider today what are potential candiates to look at late this year when the new car show comes to town.  We go to those shows because there are no sales allowed and we can take our time to look at the styling and comfort of all of the cars and generally walk out with our potential list narrowed to 2-3 cars that we will test drive next spring when we are ready to shop.  I suspect we will keep our current car (Honda Accord) for another year or two but this is the method that has worked for us. 

On the rental car advice I would be cautious to follow that advice.  Many people drive those cars hard and they never get a proper break in period which is important for the long term health of drive components.  Also the pricing from rental car companies isn't very good.  Earlier this year I was shopping for a Mazda 3 for my daughter, Hertz and Enterprise wanted just under $14,000 for their base cars with 40,000 miles, I ended up buying a certified pre-owned Mazda 3 touring for $12,700 with the same miles in great shape (have to be to get pre certified) and an excellent warranty and roadside assitance for 2 years.  Point is you want to do the legwork and see what the best options are, it took me about 10 days of hunting and an extra 50 miles of driving to get a better car at a better price then simply walking into the Hertz car sales lot.

[Anonymous]

---

@NichelleN wrote:

I guess experiences will vary. I just bought a car over the weekend that was financed. I had a pre-approval through PenFed but the dealer beat their rate (I took 2 hard pulls). Before that, the previous 2 cars I purchased were both done as cash sales. I simply told them I had the full payment taken care of. I left the dealership with the car each time before the check was delivered to them. I'd done a nominal down payment ($1k - $2k) and said I would follow up with a check. Both were new cars ($35K for the first, $46K for the second)

When I expressed surprise that I could just take the car, the salesman for the 2nd car basically said 'well, we know where you live'.

That doesn't answer your question specifically on credit union financing, but I thought I'd share for comparison purposes since I had the cars before they received payment.

One more thing - thanks for sharing your story here. It really helps others!

---

This is super rare.  Most dealers (95% or more) would have required a backup financing to drive a car off the lot but that is cool that they did that.   With car sales one thing you can always bet on is that experiences vary.  Buyers vary by how savy they are, how good their credit is and of course dealers vary based on the market conditions, how they perceive the value of their customers (one time get all they can or earn future business).  

[Anonymous]

I've always gone through a credit union. In my experience this is how the deal goes down:

Research the vehicle you want to buy, and value on your trade in (if you have one)

Visit FCU/Apply online for amount needed for loan so pre-approval is in place

Head to dealership that has vehicle you would like and test drive/negotiate if you plan on purchasing

SOMETIMES the dealership has direct ties with the FCU you are applying with, and the check goes straight to them after a phone call

Most of the time after the deal has been made, you call insurance and let them know so they can transfer vehicle to your insurance

Head to FCU and finish loan paperwork/grab check

Go turn in check and drive off the lot with your vehicle.

Don't be discouraged. You have the approval, just gotta pay the piper. The universe is not after you! lol

[jim44]

There are many different ways that credit unions as well as lenders fund vehicles with a dealer.  If a dealer releases a vehicle to a customer without funding in place, the customer signs a "spot delivery" form stating they have to return the vehicle if for any reason their loan is rejected by the lender especially with a preapproval.  

Some credit unions will hand the funding check to the member to pay the dealer, others use payment drafts, electronic dealer checks, (which act as payment checks) ACHs  as well as letters of guaranteed funding.  Believe me, a dealer is not going to let you drive a vehicle away without being paid.  A lender is not going to pay for a vehicle either without some type of "receipt" that the lien will be placed on a members title.  

[OroroMunroe]

Thank you for all the replies and car buying tips so far! My car buying lesson for today is LTV. Apparently, according to the loan officer, my LTV is too high. With my previous car purchase, I never had to think about LTV. I guess the banks that the dealerships work with don't worry about such things. Any LTV stories? 

[NichelleN]

---

@Anonymous wrote:

---

@NichelleN wrote:

I guess experiences will vary. I just bought a car over the weekend that was financed. I had a pre-approval through PenFed but the dealer beat their rate (I took 2 hard pulls). Before that, the previous 2 cars I purchased were both done as cash sales. I simply told them I had the full payment taken care of. I left the dealership with the car each time before the check was delivered to them. I'd done a nominal down payment ($1k - $2k) and said I would follow up with a check. Both were new cars ($35K for the first, $46K for the second)

When I expressed surprise that I could just take the car, the salesman for the 2nd car basically said 'well, we know where you live'.

That doesn't answer your question specifically on credit union financing, but I thought I'd share for comparison purposes since I had the cars before they received payment.

One more thing - thanks for sharing your story here. It really helps others!

---

This is super rare.  Most dealers (95% or more) would have required a backup financing to drive a car off the lot but that is cool that they did that.   With car sales one thing you can always bet on is that experiences vary.  Buyers vary by how savy they are, how good their credit is and of course dealers vary based on the market conditions, how they perceive the value of their customers (one time get all they can or earn future business).  

---

I thought it was super weird. It was at 2 different dealerships, 9 years apart. The first was Mazda and the second was Cadillac. Each time I expected to come back once I had a check in hand. I certainly had to sign all of the paperwork. But, after that, they each handed me the car keys. I had no back up financing and neither dealer ran a credit check. The finance manager at the Mazda dealership tried, but I declined. Instead, they received checks in the mail 1 to 2 weeks later.

[jim44]

LTV  Loan to Value.  In other words the ratio of amount you borrow and the value of the vehicle (or collateral).  If you borrow $20 to buy a car that has a NADA value of $15k the lender will either refuse the loan or ask for a down payment.  That way if you default the lender can recoup money from the sale of the car.  If you have negative equity in your trade or you buy additional products such as an extended warranty this will affect your LTV. 

[striper]

2+ years ago I wanted a new SUV and I happened to get a pre-approval from Capital One.

I went to the dealer and told them I wanted to buyh with my preapproval.

It tuned out that they ran my credit 4 times!

They even ran it twice on the same company.

I suppose I should have told them not to run it but not sure why they needed to loom for alternative financing when I told them from the start that I was using Cap 1.

[OroroMunroe]

Car buying tip for today, when in doubt, keep your old car, if possible. I have the new car, but I now miss my old car. After a short learning curve, the purchase process was pretty simple. Pick up the check, take it to the dealership, and drive away in your new car. Considering how chaotic it was at the creditpulling-crazy dealership, the end result of all of this is pretty anti-climatic. Buyer's remorse is the worst.   Happy car buying, and beware of emails promising great deals on shiny, new things. I fell for it.