Loan process and new car question

[Ghoshida]

Happy 4th of July!

First time buyer question.

I have decided (more or less) to buy a 2016 Hyundai Sonata Hybrid (base model, last year's).

The best price, after asking for Internet quotes from multiple dealers in my area is $19,995 and out-of-door is about $21,600.

This includes Hyundai deals and dealer discount for 4th of July sale.

(Side question, let me know if you think I could do better).

I applied for a DCU loan before deciding on the car for $25k. I got an email asking me to upload latest pay stub and purchase document.

I called their phone number and was told I got 2.24%. I can get another 0.5% off with direct deposit and a further 0.25% off with the hybrid (high mpg cars).

No confirmation email.

Don't I need to have a loan ready before I go to the dealer?

I have uploaded the pay stub.

Can you tell me what will be my next steps?

Also, do I need an insurance quote before I get my car home? I have liability only.

[Anonymous]

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@Ghoshida wrote:

Happy 4th of July!

First time buyer question.

I have decided (more or less) to buy a 2016 Hyundai Sonata Hybrid (base model, last year's).

The best price, after asking for Internet quotes from multiple dealers in my area is $19,995 and out-of-door is about $21,600.

This includes Hyundai deals and dealer discount for 4th of July sale.

(Side question, let me know if you think I could do better).

I applied for a DCU loan before deciding on the car for $25k. I got an email asking me to upload latest pay stub and purchase document.

I called their phone number and was told I got 2.24%. I can get another 0.5% off with direct deposit and a further 0.25% off with the hybrid (high mpg cars).

No confirmation email.

Don't I need to have a loan ready before I go to the dealer?

I have uploaded the pay stub.

Can you tell me what will be my next steps?

Also, do I need an insurance quote before I get my car home? I have liability only.

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Yes u should have all paperwork saying u already got loan. Bring in the loan approval when u get car. U will also need full coverage insurance in order to take vehicle from dealership 

[Watchmann]

If you are going to use the DCU loan you will need whatever confirmation they normally provide when you visit the dealer.  But the dealer has financiing options as well so you'll want to see what they can do, they often have zero, or very low, rates that will beat whatever financing you have already set up.  Go with what works for you.

You do NOT need to have the insurance set up before you go to the dealer but bring your insurance card because your current policy will cover you automatically on any new car you purchase for about a month and the dealer will put that on the vehicle order sheet.  That gives you time to give the insurance company your new VIN and arrange for the new car to put on your policy.  You will need Comprehensive and Collision coverage if you are financing the vehicle, the lender will require that, and they MAY require proof of that before you leave the dealership with the car.  Sometimes they will check what kind of coverage you already have and sometimes they don't.   And the lender will be added as a lien holder on your policy.  And it is good to get the gap coverage from the insurance company rather than the financing company, it is far, far cheaper.

[Anonymous]

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@Watchmann wrote:

If you are going to use the DCU loan you will need whatever confirmation they normally provide when you visit the dealer.  But the dealer has financiing options as well so you'll want to see what they can do, they often have zero, or very low, rates that will beat whatever financing you have already set up.  Go with what works for you.

You do NOT need to have the insurance set up before you go to the dealer but bring your insurance card because your current policy will cover you automatically on any new car you purchase for about a month and the dealer will put that on the vehicle order sheet.  That gives you time to give the insurance company your new VIN and arrange for the new car to put on your policy.  You will need Comprehensive and Collision coverage if you are financing the vehicle, the lender will require that, and they MAY require proof of that before you leave the dealership with the car.  Sometimes they will check what kind of coverage you already have and sometimes they don't.   And the lender will be added as a lien holder on your policy.  And it is good to get the gap coverage from the insurance company rather than the financing company, it is far, far cheaper.

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Also when u comparing interest rate. Also look at it when u bringing in financing from another company ur considered a cash buyer. So if they have incentives for cash buyer u can calculate the cash price compared to interest rate and see which one will save u more money

[RonM21]

As mentioned, you want to hear all of your options and weigh them out. Once you have the info from DCU needed in hand, you kind of run the show from there. You can make the decisions that best suit you.

[Ghoshida]

Thanks all.

So a few follow up questions.

DCU says that their inquiry (and APR) is valid for 45 days. I'd think it'll be the same/similar for the dealer financing too?

But DCU needs a purchase agreement before they finalize the loan. 

So in the case I decide to use DCU financing (and not dealer), I can sign a purchase agreement (with a down payment) without paying the full amount? Then I get DCU loan confirmation and take delivery of the car at a later point?

If for whatever reason, the DCU deal breaks down, can I then return to the dealer to get his old offer?

[Anonymous]

The correct way to do this would be to head to the dealer first.  Pick out the car and get an out the door price.  If you are putting down money, make sure you have them calculate that into your out the door price, and put it all on a buyers order.  Then take that BO, and send it in with your app for financing.  The CU will look at the numbers, your credit and the value of the car and make a decision.  If they approve you, they will most likely overnight a check to you for the out the door price.  Then you take that check, plus your down payment to the dealer and pay for the car.  If you want to shop that payment, have the dealer run your credit and get you approved through their means.  Then pick what you want or just buy the car and leave.  Its pretty simple, and most CUs run like this.

You are even luckier if you are close to the CU and you can walk in and get your check.  That would be ideal.  Me personally Im going to app with Penfed, then see what the dealer can offer if I dont get tier one rates from them.

[Ghoshida]

Thanks CreditNewguy.

Exactly the steps I was looking for.

[Anonymous]

Another way of doing it is u do all purchase agreement. Dealership will run ur credit and get u approved for a loan. U have an option of bringing in ur own financing within 7 days. If u don't bring in own financing u will be financed through whatever the dealership got for u but for this u get to drive ur car off right away

[Ghoshida]

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@Anonymous wrote:

Another way of doing it is u do all purchase agreement. Dealership will run ur credit and get u approved for a loan. U have an option of bringing in ur own financing within 7 days. If u don't bring in own financing u will be financed through whatever the dealership got for u but for this u get to drive ur car off right away

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Updates:

First dealership ran out of the car (and the deal) I was looking for. 

Couple of other dealerships acting too shady so didn't feel comfortable.

Went to another one (drove about 3 hours !!) and finalized the deal there.

However the finance manager wasn't able to locate any rates for us. Weird. His explanation was that it's saturday evening so lenders are probably closed therefore no responses. 

I got the purchase agreement and scanned it for DCU. Their rates etc. still valid (2.24% without DD, 1.74 with DD, 5 years financing) and they're overnighting me the cheque. So I'll get it tomorrow. 

In the meanwhile I'm arranging insurance through my local CU (UFCU / Travelers). My previous insurance was liability / non-owners so that's inadequate for the purchase. 

If all things align properly I'll have it this week. 

First big purchase here, so I'm quite excited.