Test Drive and Credit Pull

[hardworkpaysoff]

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.

[Anonymous]

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!

[hardworkpaysoff]

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.

[Dustink]

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.

[masscredit]

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! 

[ezdoesit]

+1

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

[masscredit]

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. 

[hardworkpaysoff]

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.

[Dustink]

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@hardworkpaysoff 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.

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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/216130...

[boomhower]

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.