RoadLoans, Santander, and Loan Acquisition Fees! Help

[SFssft1911]

I applied for a loan with RoadLoans and was approved for a $24,000 loan at 16% with a down payment requirement of $2,400. Days later I found the perfect car and after working the dealership over a bit I managed to drive the price down from $22,000 to $15,000. Since the vehicle is considered "USED" even though it's a new 2013 model I was required to submit an application to Santander (parent company to RoadLoans). They approved the loan and everything was good except for the $3,200 loan acquisition fee. Due to my negative equity in my trade the dealer was unable to actually make the deal happen. This particular dealer doesn't usually deal with Santander so I'm thinking maybe the inflated acquisition fee is in an effort to get me to deal with one of Santander's "preferred dealers." I have found another vehicle at my local CarMax and I'm hoping that maybe the aquisition fee there won't be as harsh.

What are your thoughts? Is this $3,200 acquisition fee typical for all dealers or what? Under ordinary circumstances I wouldn't attempt to trade in my current vehicle given the negative equity, however my current vehicle doesn't get very good fuel milage and I am now in a position where I require a highly fuel efficient vehicle.

[Creditaddict]

what the heck is an acquisition fee?

I have used Roadloans/Santander and bought a few cars from CarMax, I don't know about any Acquisition fee.

I'm more interested in where you are going to buy a car that a dealer is able to go from $22k to $15k on a car price unless he is adjusting for your trade because I just don't know any dealers that have that kind of working room in a used car here!

[Gladius]

^^This^^

[Remember0]

A) I agree with these guys. How the heck did a 22k 2013 come down to 15k? (I'm not even in the market and I'd buy at that price haha) What car exactly are we talking about here?

B) So in general (since Creditaddict said he doen't know), Santander charges the dealer an acquisition fee that can run into the thousands to fund certain subprime deals. In addition to the egregious interest they charge you, they charge the dealer an extra whatever to fund the loan. Most dealers pass this straight on to the consumer. But some, like Carmax, don't pass it on to the consumer. I'm guessing Carmax has negotiated the rates down with Santander (KMX might very well pay 0 acquisition fees, but I doubt it's 0 tbh).

C) How much negative equity we talking about here OP? Carmax can roll it in if it's a little, but if a dealer wasn't able to roll that equity into a 22k worth car negotiated to 18.2k (15k+acquisition fee), I'm guessing there's over 5k negative?

[Creditaddict]

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@Remember0 wrote:

A) I agree with these guys. How the heck did a 22k 2013 come down to 15k? (I'm not even in the market and I'd buy at that price haha) What car exactly are we talking about here?

B) So in general (since Creditaddict said he doen't know), Santander charges the dealer an acquisition fee that can run into the thousands to fund certain subprime deals. In addition to the egregious interest they charge you, they charge the dealer an extra whatever to fund the loan. Most dealers pass this straight on to the consumer. But some, like Carmax, don't pass it on to the consumer. I'm guessing Carmax has negotiated the rates down with Santander (KMX might very well pay 0 acquisition fees, but I doubt it's 0 tbh).

C) How much negative equity we talking about here OP? Carmax can roll it in if it's a little, but if a dealer wasn't able to roll that equity into a 22k worth car negotiated to 18.2k (15k+acquisition fee), I'm guessing there's over 5k negative?

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now this I follow thanks

Hopefully OP can come back and update.

[SFssft1911]

The vehicle in question is a 2013 Fiat 500 Abarth. I searched nationally for the best possible deal and found one in Maryland that was used as an advertisement car. Subsequently they dropped the price down to $15k. I'm not in or near Maryland so I called a local Fiat dealer to see if they would do a price match, understanding that they are necessarily direct competitors with each other. Well I got shot down. They said they would go as low as $18k but no more. So I continued my search which eventually led me to a dealer in Wilmington, NC (about 2 hrs from me) I pitched the idea to them. They requested to see the ad from the dealer, I promptly sent it to them and after a short discussion the sales manager agreed to match the price.

As far as my situation is concerned, I'm recently divorced. My ex did everything in her power to drag me, my finances, and subsequently my credit through the mud along with opening three credit cards in my name (using a power of attorney that I got her while I was deployed), and emptying my saving account of $30k. As a result my dream truck, the truck I worked so hard to get and to modify was repossessed ($50k truck with $25k in modifications). After this happened I spent what money I had left on a used car which turned out to be a money pit and eventually feel victim to a cracked engine block. So once again I found myself in a rough situation. I ventured up to Virginia Beach, VA to a dealership that guaranteed financing. Not the smartest choice but due to my credit one of very few options. I over paid for a 2009 Ford Edge SE and got slammed with 18% APR.

I'm now preparing for the future and looking for something with outstanding gas mileage. I'm in the Army and have just one year left before I get out. When that time comes I will move on to a government contracting job that takes me overseas for months at a time. I have also recently applied to medical school and was accepted so after the contracting job I will yet again enter the school environment. So my goal is to lower my current payment of ($550 to around $450-475) enabling me to pay-off some things over the next year. Additionally, the savings on fuel will, in the long run, be a huge factor for me.

So that's what I'm up against and that's my story. Unfortunate I know, but things are looking up and, as a 31yo, I have a solid plan in place for the future of my finances and credit.

[Creditaddict]

Have you joined navy fed credit union?
Usaa?
Surely with military you can go a route outside road loans?
Fiats while better gas then edge are not that spectacular though?

[Remember0]

Okay, I see. First off, sorry about what happened, but thanks for your service and I'm glad things are looking up. Congrats on med school too -- obviously not easy. I have friends who went/are going through that process.

I'll second the military CU idea. Especially NFCU (Navy Federal CU), I hear they can overlook a lot.

Another question I now have is your current buy here pay here (aka "guaranteed" financing) car loan reporting to your credit report? Often times, they don't...

[sbluejean]

Okay, here's the real dope. Acquisition Fees or Discount Fees as they are also known are those charged by the lender to take the loan. Basically, it's a fee that goes into the lender's loss fund account and helps defray their repo losses. And yes, Santander is the most egregious of them all. I see $2,000.00 to $4,000.00 fees from them all the time. They're what we call, "Bottom Feeders". If no one else will take the loan and if you can fog a mirror, they will. But, there are those pesky fees.

Now, under federal law those fees cannot be passed on to the consumer. Federal law regards those fees as charging for credit which is illegal, so they have to be borne by the dealer, not the customer. So in essence, if the deal structure won't support the fees to where the dealer can make a profit, they'll just tell you they can't sell you the car or they'll tell you that your aplication was denied. What they can't do is jack the price of the vehicle up to accomodate the fees.

When I submit a loan to my lenders, to get around having to deal with the Santander factor, I generally make sure the deal is structured within accepted conventional lender guidelines and shows trade equity (real or imagined). I'll give you another little tip.. Make sure you've got some cash to put down. I don't care if it's just $500.00 (which I can assure you, won't impress the lenders at all but at least it's something). The point is this, many of the lenders I work with have an internal scoring program that gives points for "Cash Down". On a credit-challenged customer deal, I always make sure that I have something to show for "Cash Down". Believe me, all other parameters of the loan being equal, it can make the difference between "Approved" or "Declined". Good, sensible structure combined with some cash down will generally allow me to get the deal hung with other less egregious sub-prime lenders which, allows me to give the customer a better deal and a lower payment.

Hope that helps.

[Credit_Tard]

That loan would cost you $5,000 in interest - assuming the economy and financial system will even be around in 48 or 60 months - which it will NOT.

For just that $5,000 you would theoretically pay in interest, you could get a perfectly fine 5 or 10 year-old automobile from a private seller.

But again, the whole automotive industry is in the midst of a massive bubble which will pop in the next 20 months or so.