@Volpes wrote:I've always felt that USAA was secretive about things, but regardless...
Nowhere does my loan documentation, or online, does USAA give any info about a downpayment. However, on the electronic ACH check I hand over to the dealer it does say:
"The final loan amount may not be for the entire approved amount and is subject to USAA’s determination of the value of the selected vehicle. The purchase of add-ons (such as an extended warranty) or excessive negative equity may require a down payment."
Scenario: Joe Smucky is approved for $23,000, hands over his USAA check for a $18,000 out-the-door (including tax, title, fees...) with no downpayment, no trade-in. Could USAA deny his loan on basis of what they think the "value of the car" is workth? Thats what it sounds like.
Basically, is a down payment required?
That's an interesting question, and I think you'd be better off posing your specific scenario (not a hypothetical one) to USAA directly.
If USAA thinks that you're paying too much compared to the value of the car, they may reduce the loan amount; however, at least from the description, if your loan covers a reasonable OTD price, I don't think a downpayment would be necessarily required in that case.
Basically what they're trying to prevent is a loan for 18K on a car value that's only 14K. Sometimes cars get marked up above MSRP even (Acura CL back in think it was 2001ish, those cars were selling faster than they could be produced) but in general it's to prevent various negative equity potential shenanigans.
Most USAA approvals are for 120% LTV.
So, as long as you have negotiated well. No down payment is required.
You should think about putting money down. That will help keep you from being underwater on the loan. I would recommend 20% down plus pay TT&L out of pocket.
@Dustink wrote:Most USAA approvals are for 120% LTV.
So, as long as you have negotiated well. No down payment is required.
You should think about putting money down. That will help keep you from being underwater on the loan. I would recommend 20% down plus pay TT&L out of pocket.
If you get a sweetheart loan rate, use the cash for something else if it's not required. This is likely the lowest rates we're going to see in our lifetimes, if not ever. Take advantage of it while one can.... I agree with all your philosophy that putting 20% down is a useful hedge; however, I'd rather have that cash sitting as a reserve as a hedge instead if there's no immediate need to use it for financing.
@Revelate wrote:
@Dustink wrote:Most USAA approvals are for 120% LTV.
So, as long as you have negotiated well. No down payment is required.
You should think about putting money down. That will help keep you from being underwater on the loan. I would recommend 20% down plus pay TT&L out of pocket.
If you get a sweetheart loan rate, use the cash for something else if it's not required. This is likely the lowest rates we're going to see in our lifetimes, if not ever. Take advantage of it while one can.... I agree with all your philosophy that putting 20% down is a useful hedge; however, I'd rather have that cash sitting as a reserve as a hedge instead if there's no immediate need to use it for financing.
Also corresponds with the lowest rates offered for savings. So, without risk to principle. That money won't earn much.
It doesn't take much for the vehicle to lose 20% of its value. 1 year of depreciation, a door ding, and a spill inside. If you invested that money and it lost principle. You are now stuck with negative equity.
USAA has me pre-approved for an auto loan up to $20K. They apparently don't know how cheap I am, LOL!
Starting Score: 675
@Volpes wrote:I think at least 20% down on a house is a VERY good idea. However, I suppose a car is different. I'm all for a fair deal and not shopping by "monthly payment". I get what you are saying, but sadly I have some credit card debt and my emergency fund is not where I think it should be. By technicality I suppose I'm ok, I am currently approved for $25,000 but I'm looking at $12,000 - $15,000 cars (trying to at least). Once I drive off in my new (used) car I can then sell my current car for $4000/$5000.
Meh, too many variables.
Where do you get the 120% LTV? Nowhere in my USAA documents does it even mention a LTV. Still waiting on my Capital One Blank Check... I hope its not 90% LTV, I'm getting way to anxious.
As long as you have no need to get out of the vehicle right away, no major worries. Just paying a bit extra in interest. Get your emergency fund in shape first, then if some is safely leftover. Put it towards the auto.
I bought a used SUV two weeks ago with a loan from USAA. The LTV guideline was 120% and they told me it's based on the Black Book value of the vehicle. To eliminate any questions about whether or not the vehicles I was looking at were within that guideline, I called and gave them a few VINs. They plugged the VINs into their system and told me exactly how much they would finance for each one based on their guidelines. They were willing to give me the amount for each vehicle based on the year, make, model and miles, but I gave VINs because I had them and like to have all of my bases covered.
