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dealer vs. Penfed credit union financing - how does this work?

Discussion in 'Newbie Forum' started by turapeach, Jul 25, 2009.

  1. turapeach

    turapeach Member

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    2010 Prius
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    II
    Well, after a couple of months of debate, and a couple of days of test drives, we put a deposit on a 2010 Prius II that should be delivered sometime in the next 1-3 weeks. We are very excited, but I'm finding myself confused about how car loans work. We have never had a car loan before, and while we could pay cash, 3.99% from Penfed is a little too good to pass up.

    So, I joined Penfed credit union and applied for the new car loan, and I have been approved. They told me that I need to have the dealership fax them a P.O. with the VIN # for the car. I e-mailed the dealership requesting they do this. They e-mailed me back saying that their finance people thought they might be able to match Penfed's rate, but that they would get me the VIN # when they got it (but didn't say that they would fax a P.O. to Penfed as requested).

    I have been really pleased with my very brief interactions with Penfed, and would sort of like to finance through them, but we are one car short until the 2010 comes in, so we are going to want the financing all lined up and in place ASAP which may mean financing with the dealer.

    Does anyone know when dealers usually get VIN #s for cars? Do I have to wait until the car is on the lot? I would have thought that they would know by now since the car is already on a boat or maybe even in port....

    And after Penfed has the VIN#, does anyone know how long it usually takes before the dealer has the $ from Penfed?

    Thanks for any info/advice!
     
    #1 turapeach, Jul 25, 2009
  2. EJFB1029

    EJFB1029 New Member

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    First, it doesn't really matter, as long as you get the best rate, if dealer, make them give you a better rate.

    Two, you can't finance a car that you don't have yet, the VIN# the dealer will get for a car coming in, is subject to change, another dealer may somehow get the vehicle instead, its happened. Once the car is actually delivered, then you will have the correct VIN# and all necessary paperwork to submit to Penfed.

    What the dealer will do, is do a Draft by fax for their money, if you go through Penfed that is. What is actually happening is that the dealer faxes Penfed their banking instructions, and Penfed transfers the funds, thus you become the property of Penfed. :cheer2::D

    Or you become the property of the dealer's financing, which ever comes first. ;)

    Oh, and another reason dealer wants to make a play to finance you, they get a kickback from whichever financing company they get to finance you, so no reason you shouldn't try to get them to get you a little better rate then Penfed, to justify you going with them. ;)

    I actually had my dealer try to convince me that their HIGHER rate was a better deal then the much lower rate my credit union offered, I had a big laugh on that.
     
    #2 EJFB1029, Jul 25, 2009
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  3. 12parsecs

    12parsecs Junior Member

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    My dealer was able to fax the VIN number to PenFed a couple days before they actually had the car. There was a little issue at PenFed since the VIN number wouldn't show up in their system, but a manager was able to push it through.

    When you finish your paperwork at PenFed, they give you a check for the amount of the loan, and you simply give the check to the dealer as if you wrote the check yourself.

    Don't forget any deposits if you made any! I had to remind the finance guy at my dealership that I had a deposit.
     
    #3 12parsecs, Jul 25, 2009
    1 person likes this.
  4. SageBrush

    SageBrush Senior Member

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    Vehicle:
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    PenFed is a superb credit union. What do you know about the lender the dealer *might* use ? Anyway, I'll wager that the dealer is hoping you will come in without outside financing set up, hoping you will go for a rate *higher* than PenFed's to avoid not getting your car that day.

    IMO, if the rates are equal this decision is easy. If a couple days delay using PenFed is an issue, pay $10 and ask them to overnight the post. I have never financed, but you might check with PenFed to see if you can walk into the dealer with your PenFed check in hand, and then decide not to use it on the rare chance the dealer actually does have a better deal for you.
     
    #4 SageBrush, Jul 25, 2009
    1 person likes this.
  5. turapeach

    turapeach Member

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    Thanks for the info and opinions!

    Well, it looks like our car won't be in until the week of August 10. In the mean time I'm either playing chauffeur to dh, or stuck home without a car with the kiddo. But I'm sure it will be worth it in the end.

    I e-mailed Penfed, and sure enough, we have to wait for a check to be mailed after they get the VIN#, so frankly, whatever we have going in the next couple of days after the car is delivered will likely determine where we get the financing. If having them overnight the check will work with our schedule, then we will go that route, but frankly, I have a pseudo-job interview on the 10th, and if the car turns out to be available that morning, it sure would be nice to be able to stop being a one car family that day.
     
    #5 turapeach, Jul 29, 2009
  6. tumbleweed

    tumbleweed Senior Member

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    If the dealer offers you a better rate than the credit union be sure to call the credit union with the details before you sign. There may be more than one way to compute interest rates, I know at one time there was, not sure any more. I would probably just go with the credit union anyway, I trust a good credit union, I don't trust car dealers, at least not most of them. I think you definitely should be able to get the VIN days if not weeks ahead of time, I would look into that. Good luck, enjoy your new Prius. :cool:
     
    #6 tumbleweed, Aug 3, 2009
  7. snead_c

    snead_c Jam Ma's Car

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    It's very hard to beat a federally insured credit union deal. Credit unions are groups of members who pool their money to serve members with no profits to pay share holders. Overhead is comparatively low and pressure to loan is relatively nonexistent.
    The banking industry operates to make profits for it's stock holders (remember all members are equal stock holders in credit unions.) That is the reason banks exist. If you know of a good local involved bank and you have investment money you might consider investing in it by buying stock and reaping rewards from your investment if it makes money from borrowers (personal, auto, home etc.) There is nothing wrong with the system. It's the American way.
    On the other hand your goal is to get the best apr interest rate and (bottom line including fees) for your car purchase.That's also the American way. Your auto dealer has a vested interest in brokering your loan (there will be and should be some form of payment to the dealership for his trouble and effort.) If you shop Rome apples to Rome apples you can see that it is almost impossible for the dealer's bank loan to beat the credit union's... money to dealer, bank overhead, and shareholders.There have been occcaisions when auto makers have subsidized interest rates to move slow selling vehicles but I'm confident Toyota is not doing that on a Prius.
    Bottom line for me would be to talk to your credit union loan manager before signing any loan agreement. Even if you have to cheoffer etc for an extra day or two. He/she will know what's in your best interest and will advise you, the credit union member, without undue bias.
    No, I don't work for a credit union but have been a member of one for forty one years and have spent more than half of that time on unpaid credit union advisory boards..in fact my first car was financed by a credit union 41 years ago last month...a new 1968 Firebird for $3,000...but that's another long story. :rolleyes:

    Congratulations on your wise auto choice :cheer2:
     
    #7 snead_c, Aug 3, 2009
  8. turapeach

    turapeach Member

    Joined:
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    2010 Prius
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    II
    Well, I thought I should give an update on our situation. The good news is we have our Prius! The bad news is that the whole financing thing didn't work for us at all. We wound up paying cash - which I guess isn't all bad, but things will be a smidge tight for a couple of weeks.

    After we got the VIN# for our car, we filled out the online credit app. for our dealership, just to see what they had to offer. When no one called us, I called them, and they said that although we had excellent credit, and they would like to do business with us, they couldn't match or beat Penfed's rate.

    So, then I called Penfed with the VIN# and asked about express mailing the check. They said the only way they could FedEx the check was by taking money out of our credit union account - which I had opened with $5 - so I would need to deposit more money - which I couldn't do quickly (our regular bank does a test transfer before they will actually transfer real money, so the process takes a day or two). We were waiting on the Senate to vote on the Cash for Clunkers additional funds, so I figured we would try waiting out the US Mail.

    Several days later, our car is in, the Senate has appropriated the funds to cash in our clunker, and there is no sign of a check from Penfed. We really needed the car, so we went ahead and paid for it. Two days later, it had been a week since Penfed was supposed to mail our check, and still no sign of it. We were starting to worry that it could have been delivered somewhere else by mistake, and that this could be a problem (not in terms of us getting the money - a problem in terms of potential fraudulent use of the check). So I called. They had never even mailed the check.

    I asked if they could tell why the check hadn't been mailed, and the CS Rep said that she didn't know. It looked like everything was in order, but the check just never got issued.

    So - while I was impressed with the professionalism of everyone I spoke with at Penfed, I would recommend that future customers call to confirm that their checks were mailed out in a timely fashion.
     
    #8 turapeach, Aug 15, 2009
  9. tumbleweed

    tumbleweed Senior Member

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    Sorry about your problems with the credit union, most of them are better than that. Well I guess cash is still king, sometimes anyway. That's how I'm paying for mine too.
     
    #9 tumbleweed, Aug 15, 2009
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