topic Re: Test Drive and Credit Pull in Auto Loans

Test Drive and Credit Pull

Anonymous — Sat, 25 May 2013 09:22:06 GMT

For any of you out there who have followed my two pevious posts, I am interested in buying a new 2014 Mustang v6 manual at the end of August of this year. I went to a dealer today to test drive the car, and ended up having a lot of my questions answered, and my credit pulled. For the sake of reference, my only credit lines are in my signature: I have no installment loan history of any type.

TU Auto 04 FICO: 702

EX v3 Auto: 672

The sales lady said she was surprised at how good my credit was for just recently turning 19 in April. Although they did not run it through any banks or Ford Motor Credit, she said that after a brief discussion with the finance guy, they are sure I would be approved for the promotional rate of 1.9% for 60 months. So now, I have atleast confirmed that I will be able to get a decent rate on this loan, if not a pretty darn good one.

Some questions I have for the community:

1) UGH! Another hard pull. This is going to put me at 9-10 now. By the time I apply I will be down to 5-6, but these numbers scare me. Should I be this worried about hard pulls and how it effects my credit score?

2) I plan to actually order the car, which needs a 6-8 week lead. Will I have any negotiation power in this, even though its a brand new model and BTO?

3) In regards to ordering, are they going to pull my credit at the order time and then pull it again when the car arrives and I sign the paperwork? That would be nuts!

4) Anything I'm missing...? I feel like I've got most the bases covered.

5) Anybody ever been inside a Shelby GT500? The dealer not only let me get inside the one on the showroom floor, but I also got to start the engine and I revved it just a bit for fun. All the customers on the floor looked directly at me, it was great! I was also suprised I was allowed to test drive alone... no kidding. They must have good insurance to let a 19 year old drive a 300HP car alone.

Anyway that's all for now, its nearly 3:30AM here.

Re: Test Drive and Credit Pull

Anonymous — Sat, 25 May 2013 10:50:54 GMT

So they told you that you would qualify for 1.9% with no solid credit history other than a few credit cards? I hate to be the one to tell you this but they are blowing smoke up your butt. Ford Motor Credit will not give you that rate at your age and with little credit histor even with a big down payment. Sales people will tell you anything to sell a car and if you're lucky you'd get maybe something around 6% apr.

I bought a brand new 2013 Ford Focus SE in Jan and put 10k down on the car was over 19k and Ford Credit only gave me apr @ 9.19%. They were the only people to finance me at the time and my Fico was 663 no baddies and thin file. I'm refinancing with my credit union next month and getting it knocked down to 2.4%.

Good luck because those new mustangs are really nice rides!

Re: Test Drive and Credit Pull

Anonymous — Sat, 25 May 2013 15:51:36 GMT

Well, I feel what your talking about, but why would they do that? When it comes to time to actually see what I can get, and it's nothing near what they said, it's not like I'm going to go through them. I mean it doesn't benefit them at all to tell me this now.

Re: Test Drive and Credit Pull

Anonymous — Sat, 25 May 2013 18:51:50 GMT

A high score with limited history can cause trouble. It causes people like salesmen to think you will get approved, but when an underwriter looks at it they won't allow it. Unless the dealer has some major pull with the bank, it is unlikely you will get approved. The bank will like to see two years of credit history, what will be your length of history when you get the car?

I was able to get tier 1 by putting a third of the purchase price down. Similar to you; short history, young, first time buyer. How much are you going to be putting down? You must understand the risk to them. A 19 year old buying their first car (one that depreciates very quickly). The only way to offset that risk is with a huge downpayment, otherwise it is a recipe for an upsidedown repo.

All the dealer wants to do is get you back in the door. They will say anything to make that happen. You still need to follow the general procedure of getting a pre-approval before going into the dealership. I got mine through USAA. 1.9% for 60 months, but the dealer gave me 0% for 36 months. I would prefer a 36 month loan anyways, because it helps keep me out of negative equity.

Re: Test Drive and Credit Pull

masscredit — Sat, 25 May 2013 18:59:13 GMT

Sounds like this is your first new car so I'll just tell it how it is. People at dealerships lie. The salesmen, the sales manager, the finance guy, the janitor... they all lie! Maybe that's a little to general because there are probably a lot of good places that are straight up and honest with their customers but I've found them to be few and far between. Their objective is to seperate you from your money or the money that you can borrow. Not only seperate you from it, but make the most profit that they can while doing it.

I remember my first new car purchase. I had no club. I thought I was supposed to pay sticker price and that was it. I got raped on that car! I haven't looked into Ford Credit but I believe you might be able to apply online. Actually, I just looked, you can at - http://credit.ford.com

The finance dept can make money on loans. For example, they might say "You have a limited credit file but we were able to talk to the bank and get them to approve you for 7.9%). So your thinking "Wow, that was nice of them to help me out". Meanwhile, they got the loan for 4.9% and they are making 3 points off of it. Cha ching!!! $ in their pocket!

As for the purchase price and ordering the car, it should just be one pull. The V6 Mustang isn't a speciality or limited production vehicle. It's not like a Shelby where they will try to get sticker and then some for it. You should be able to order it for maybe $300.- $500. over what the dealer's invoice cost it. The car will come into them, be cleaned/prepped and go out so they won't be paying for a vehicle to sit on their lot. Check a website like www.kbb.com to get an idea on pricing. They might not have 2014 pricing out yet. Know the car, know what options you want, know the pricing (dealer cost and retail) then try to work a deal. Any vehicles that I've ordered, as long as they weren't limited production or speciality vehicles, were $300.-$500. over dealer cost.

Don't let them sell you on things like undercoating, scotchguard, mosquito repellant ect, ect... It's all added dealer profit (ADP). These are things that aren't needed. The dealer just pushes them to make $. Extended warranties. Another item that dealers make good money on. Loan insurance. You can be the judge but I've never taken it. Another money making item.

So the best thing is to know the car, know what you want, know what it costs, try to take care of financing ahead of time them go into the dealership and deal. If you pay to much for this one, that will haunt you for years to come because when you goto sell it or trade it in, you'll be trying to make up that extra money then rolling it to the next one then the next one.

The V6 Mustang is no Shelby but still a fun car. Low 14 second 1/4 mile times and gas mileage approaching or exceeding 30 MPG. You can put a ProCharger supercharger on it in the future and show some of the V8 models your taillights!

Good luck!

Re: Test Drive and Credit Pull

ezdoesit — Sat, 25 May 2013 19:11:55 GMT

All the dealer wants to do is get you back in the door. They will say anything to make that happen.

This statement is so true they know that the percentage if they let a customer out the door of them actually returning is very little. They know this because there are so many factors like another car you might find, buyers remorse. I am sure she asked what other cars you are looking at or how much you want to pay a month. With that question if you do get approved that they can make the numbers work with longer terms, less options or bigger downpayment. So they tell you what you want to hear. I hope for your sake we are all wrong but it will be hard for you to get approved with your thin profile. GL

Re: Test Drive and Credit Pull

masscredit — Sat, 25 May 2013 19:25:55 GMT

Oh yeah, one other thing to build on what was said above. The question of "how much do you want to pay per month". I've never liked that question. I usually just tell them something like "whatever it costs". I look at it as, say the payment would come out to be $300. per month but you tell them you want to pay $325. before you know that, they will find a way to make it $325. They might actually start by saying that it will be $340. then look like a hero if they bring it down to $325.

A buddy of mine bought a car last year. He's wasn't in sales but he worked in the automotive retail business for many years so he knows how the game is played. He had a good rate from his bank when we went to the dealership. He wanted the car after driving it and told that he was going to go with his bank unless they could do better. At first they said that they could get him the loan for a few points over that and he could take the car the next day instead of waiting a few days for things to be done at the other bank. He said no. It was the end of the month, they were trying to meet a quota, not only did they take a little additional money off of the price but they said they "worked some magic with the bank" and was able to get the rate down to a few points lower than the other bank. We think they gave up their points to close the deal that night.

Re: Test Drive and Credit Pull

Anonymous — Sat, 25 May 2013 19:38:08 GMT

I actually was asked neither, but nonetheless good points.

Maybe I should wait longer until my AAoA is over 1.5-2 years, I'll be 20 at that point. Maybe I'll take out a secured installment loan in the mean time to make some installment loan history. Do those look good? I don't take out student loans, but would that be a good idea? A year from now all my hard pulls will be gone too and I'll have a ton of down payment to put forward.

Re: Test Drive and Credit Pull

Anonymous — Sat, 25 May 2013 20:12:56 GMT

@Anonymous wrote:
I actually was asked neither, but nonetheless good points.

Maybe I should wait longer until my AAoA is over 1.5-2 years, I'll be 20 at that point. Maybe I'll take out a secured installment loan in the mean time to make some installment loan history. Do those look good? I don't take out student loans, but would that be a good idea? A year from now all my hard pulls will be gone too and I'll have a ton of down payment to put forward.

Student loans won't help. A secured installment loan might help a little. Your biggest asset will be a large down payment.

The best market price for a 2014 v6 mustang is currently 18% off MSRP. That would require some good negotiations. The USAA price with no negotiations is about 14% off. So, do not buy this car for MSRP. It is in low demand and has a poor resale value. All of this equates to a lower purchase price. If they tell you that you can't get it for less than MSRP, Just walk out the door, many other dealerships would be happy to have your business. Just get in touch with their internet sales department's. But, first things first. Get your finances in order.

I wrote something a few days ago that might help:

http://ficoforums.myfico.com/t5/Auto-Loans/USAA-Car-Buying-Service-and-car-buying-advice/td-p/2161303

Re: Test Drive and Credit Pull

boomhower — Sat, 25 May 2013 22:11:11 GMT

Make sure you check insurance rates before you get to deep. A 19 year old and a Mustang is an expensive combo, even a V6. My coworkers kids are starting to hit driving age and their insurance is doubling and tripling just by adding the kids. Hate to see you get the car and the insurance makes it hard to make the payments.

Re: Test Drive and Credit Pull

Anonymous — Sat, 25 May 2013 22:34:21 GMT

@boomhower wrote:
Make sure you check insurance rates before you get to deep. A 19 year old and a Mustang is an expensive combo, even a V6. My coworkers kids are starting to hit driving age and their insurance is doubling and tripling just by adding the kids. Hate to see you get the car and the insurance makes it hard to make the payments.

Good point.

If you have a clean driving record. Getting decent insurance without your parents, will run up over $300 per month. If your parents can just add you and the car to their insurance, it will be more affordable (assuming they have a clean record).

Your total vehicle expense should not exceed 20% of your income. This includes payment, insurance, gas, ect. So, for this vehicle. You should be making up over $5,000 per month.

Re: Test Drive and Credit Pull

Anonymous — Sat, 25 May 2013 22:45:31 GMT

Already have an insurance quote, $130 a month.

I understand the 20% of your income thing, but iI genuinly feel it doesn't apply in my case. I don't have living expenses (rent), about 95% of my income is disposable. I've decided to wait until I have about a 40% down payment. That will make my monthly payment lower than I originally wanted, and make the banks happy. Additionally it will give my credit some time to further improve.

Re: Test Drive and Credit Pull

Anonymous — Sat, 25 May 2013 23:23:46 GMT

@Anonymous wrote:
Already have an insurance quote, $130 a month.

I understand the 20% of your income thing, but iI genuinly feel it doesn't apply in my case. I don't have living expenses (rent), about 95% of my income is disposable. I've decided to wait until I have about a 40% down payment. That will make my monthly payment lower than I originally wanted, and make the banks happy. Additionally it will give my credit some time to further improve.

Are you quoting proper coverage's? Comp & collision with deductibles you can always afford? Is that through your parents or by yourself? If it is by yourself, are you quoting sufficient liability coverage's. State minimums are not adequate. Medical payments, uninsured motorist covered ect?

On my plan independent of my parents. It would be $110 per month to insure that car through USAA. With $0 comp, $500 collision, 300/500/100 liability with matching uninsured coverage's, 100k medical payments, and rental car coverage's ect.

$130 seems like poor coverage for an independent 19 year old. It seems proper for somebody on their parents insurance.

Re: Test Drive and Credit Pull

Anonymous — Sun, 26 May 2013 01:18:10 GMT

I matched the same things my parents currently carry on their cars (I am currently on their plan).

This is a quote by Geico, by myself, no other lines of insurance on the plan:

Bodily Injury: $100K/$300K

Property Damage: $50K

Medical Payments: $5K

Uninsured/Underinsured: $100K/$300K

Comprehensive: 1K deductible

Collision: 1K deductible

$143.64 per month, so just a tad bit over the $130 I said earlier (didn't have access to my email where the quote is.)

Re: Test Drive and Credit Pull

Anonymous — Sun, 26 May 2013 02:24:09 GMT

@Anonymous wrote:
I matched the same things my parents currently carry on their cars (I am currently on their plan).

This is a quote by Geico, by myself, no other lines of insurance on the plan:

Bodily Injury: $100K/$300K
Property Damage: $50K
Medical Payments: $5K
Uninsured/Underinsured: $100K/$300K
Comprehensive: 1K deductible
Collision: 1K deductible

$143.64 per month, so just a tad bit over the $130 I said earlier (didn't have access to my email where the quote is.)

Your medical payments are very low. Even with medical insurance a deductible could be higher. What if you cause an accident with one of your friends in the car and they don't have insurance. That limit ($5,000) will be depleted very quickly, it wouldn't cover a minor fracture let alone something more. I have a $100,000 medical payments limit which would cover a severe fracture or something along those lines, but would not cover a major injury. Medical payments also pay out no matter who is at fault. So, you get hit by somebody else. They are at fault and you are injured, your medical payments will cover the injuries right away regardless of the case status. You do not need to wait years for a settlement, you are financially whole right away.

Your liability limits are sufficient if discoverable assets to the financially responsible party remain low. Just keep in mind future assets which can be tapped from a judgment. 100/300/50 will cover your average city speed accident, but may be exhausted from a highway speed accident or collision with an exotic vehicle. I have my limits higher because I wouldn't want a judgment looming over me if I caused a major accident. I also would want the medical bills covered if for example I hit a child who ran out in front of my car.

Your deductibles are very high. A $1,000 comp deductible is generally not a good idea. The cost for a lower deductible is small. For example, you hit a raccoon and it smashes the lower valance on your bumper. It will cost you $1,000 to have the insurance do anything. Or a rock tanks your headlight, unless you have separate glass coverage. You either pay out of pocket or fork over a $1,000 deductible.

Collision on the other hand is different. It cost a lot to lower the deductible. Your lender may require a $500 deductible. Otherwise it is up to you to run the numbers whether it is worth lowering or not. You back into a pole and are out a grand...bummer

I have mine set at $0 comp because it is cheap coverage and I would not want to pay anything for glass damage. $500 collision because I would only make claims for large incidences that would warrant the high deductible.

Re: Test Drive and Credit Pull

Anonymous — Sun, 26 May 2013 02:54:19 GMT

I appreciate your advice, it is really eye opening. I'll keep it into account. I must mention I live and drive in rural colorado, probably why the insurance is so reasonable.

Re: Test Drive and Credit Pull

Anonymous — Sun, 26 May 2013 03:14:22 GMT

@Anonymous wrote:
I appreciate your advice, it is really eye opening. I'll keep it into account. I must mention I live and drive in rural colorado, probably why the insurance is so reasonable.

I lived in a rural area of Washington state and the rates were very high. I now live in San Francisco and my rates are way lower...haha odd

But yes, living were you do probably helps.

The two things I would highly recommend you change, would be the medical payments and the comp deductible. Those are both very affordable changes. For me, the difference between $250 for comp and $1000 for comp is $3 per month. The difference between $5,000 and $100,000 medical payments is $2 per month. So, in the case of my 2013 Legacy it would be $5 per month to make a pretty large difference in coverage. Collision on the other hand for me is about $9 per month to go from $1,000 to $500. So, just run the number and see what makes the most sense.

If you get lots of snow, is a mustang the right car for you????

Re: Test Drive and Credit Pull

Anonymous — Sun, 26 May 2013 04:44:32 GMT

I don't get too much snow where I am at, but my Hyundai has fared two winters without any difficulty without special snow tires. I'm taking into account that the mustang is RWD, so with a pair of snow tires it should serve me well. I try to be a very conservative driver. In either case, if it is really bad snow (we've had two very mild winters thus far), my mother doesn't work and I can drive one of the 4WD vehicles in the house.

Re: Test Drive and Credit Pull

Anonymous — Sun, 26 May 2013 04:51:57 GMT

@Anonymous wrote:
I don't get too much snow where I am at, but my Hyundai has fared two winters without any difficulty without special snow tires. I'm taking into account that the mustang is RWD, so with a pair of snow tires it should serve me well. I try to be a very conservative driver. In either case, if it is really bad snow (we've had two very mild winters thus far), my mother doesn't work and I can drive one of the 4WD vehicles in the house.

Yes, with snow tires on it will do okay. Just be sure to put new snow tires on all four corners. Blizzaks seem to do pretty well, but check out reviews around the web and find what will work for you. If you rarely get snow, find a performance winter tire but still not an all season.

Re: Test Drive and Credit Pull

Anonymous — Sun, 26 May 2013 04:56:52 GMT

Okay sounds good. I'll investigate changing my #s on the insurance. If its not too much of a rate hike I'll do it for sure.

I'm still up in the air on financing. I need solid numbers that nobody (even lenders) can seem to provide me. Oh well, just a waiting game I guess.