Bear with me, this is my first car purchase...

I'm about to take delivery of an MCS w/ a price after taxes/mods/fees/etc at $30,280. I put $1000 deposit that will go towards a down payment and plan to add an additional $9K-$10K downpayment. A couple questions...
I applied for MINI fiancing through my dealer b/c I was denied through PenFed. My credit score is just under 700 and I have no consumer debt, the delinquencies on my credit report are 5 years old and I have a substantial income.

Do you think I will get financed?
And what is the best form of payment for the downpayment...personal check? cashiers check? certified check? any other options? Since it will be so large I want to guarantee that I don't have to wait for the check to clear.

Thanks.

 

I'd go with a cashier's check or certified check - something that your bank has already "signed off" on, and you won't have to wait for it to clear.

 

Ask the dealer. It really depends on what they prefer. My dealer said anything was fine except a credit card. I paid my down payment with a personal check and happily drove it off the lot. I financed through my credit union and the dealer received a check a few days later for the remaining amount. No hassle.

 

I needed a cashiers check for my down payment but like yblaser said, I would check with your dealer and see what they'd prefer.

 

my dealer took a personal check for $13k. suckas!

 

To answer your question, you'll probably get financed with anything over a ~670. Better be prepared for insane interest, though. I got a 6.6% (too high) with my 735 and my partner's 807.

AND I paid my $6k down on my credit card...for the rewards points. Dealer didn't bat an eye.

 

Believe it or not I got financed with a 599 and 11,000 down on a sticker of 26,500ish with BMW finance.... granted they hit me with a high intrest rate 14.99 but... I got financed.... now im going to refinance as it has been 6 months...

 

good to know thanks...

At this point I'm not concerned too much with the interest rate. I am hoping to refinance after 6 months if the rate is high (which it probably will be). And if I don't refinance, then I plan to pay it off as soon as possible by paying more than the monthly payment each month.

 

wow. I'd have walked on that one personally.

I don't know why dealers won't allow a CC purchase. We put $10k down and they'd only let us put $5k on the card. There has to be a loophole for them with Visa/MC or something...normally, you can't place max restrictions on method of payment

 

The reason they probably do not let you do extremely large amounts on a credit card is because the dealer has to pay a service charge which is a percentage of the amount of the charge. Percentage varies with the different types of cards, so they do not receive the full amount.

P

 

right. this is different from other retailers how? I used to sell super expensive stereo gear. When I did a $100k install....did I tell the guy 'sorry sir, any purchase over $5k has to be check or cash'? Heck no! In fact, the guy came back every week to run another $15k on his card. We did this for a month or two while the basement was being completed. When all was said and done, he had his home theater and enough points for a trip to Switzerland for him and his GF.

 

Any retailer can elect not to accept credit cards as a form of payment. Most choose to allow credit cards for conveinece for their customers but most are also unhappy at the fees they are forced to pay. Just because one high $$ retailer allows credit card purchases doesn't mean another one also must allow it.

 

of course! but that's not what is being discussed here. The issue is the cap. Visa/MC has strict rules about not charging a surcharge for using their service...one can give a discount for cash for example, but not charge more for credit.

 

$10K to $11K is a sizable down payment. And from what you say, your credit is OK. With these factors, have you considered trying to get financing elsewhere rather than accepting the PenFed rejection as the final word on your being able to get good financing?

Considering your down payment and how MINIs are holding value, a loan to you is 100% risk free. [Lenders analyze loans on what will happen if you default and they have to repossess the car. They don't want to take a loss if you default, or they want to minimize the loss as best they can.] Even without your down payment, the MINI is probably one of the lowest risk loans a lender could give.

So shop around. Consider credit unions that do not require membership in the organization they represent. Also consider banks. While money is tight, many lenders look at your deal as one of the type loan they are willing to give, even in these days of no-more-risky-loans.

Back to the car dealers: To sell you crappy financing terms [aka a high APR] salesmen try to make you feel like a deadbeat. They do this for two reasons: 1) to make you feel fortunate that you can get [crappy] financing from them; and 2) so you don't shop for financing elsewhere. One way they get you to feel like a deadbeat is to criticize your credit score.

Dealers have F & I [finance and insurance] salespeople [yes, they are in sales] whose job it is to sell you extended service /"warranty" contracts, insurance, and relevant to your post, loan agreements. This is because the dealership can make a ton of extra cash by selling all these "add-ons" to you.

On a MINI sale the dealership might make an extra $3,000 to $4,000 selling you these extras. On the financing, if through MINI USA, the dealership might get $1500 to $2000 commission on getting you to finance through them. If the dealership sells your loan to an independent financing institution it will receive the same amount. It depends on how bad a deal you agree to. The higher the APR you agree to, the more commission the dealer will get.

Because of the extra "take home pay" a salesman and dealership can make, there is a strong incentive for a dealer to instill low self esteem on you and sell you lousy financing. I have had friends with stellar credit [who are pre-approved for a great loan, but the salesman is not told this] nevertheless be told by an aggressive salesman that "this looks bad, that looks bad, maybe we can get you financing" and then offer up loans with a 16% APR.

As to how aggressive their sales tactics will be, they size you up on how you interact with them. If you appear street savvy or someone who does not take any BS, they might not try to snag you. But they really get greedy if one appears to really, really wants the MINI, no matter what. The more desperate, excited, newbies, or a pushover one appears, the more the salesman will attempt to steal from your wallet.

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In what form to pay the down payment is up to the dealer. Considering the amount of ID they have on you when buying a car there is no reason to require a cashier's check.

When I bought a BMW 540i I gave the dealer a check for $42,000. They did not think twice about it. And one time when I bought a BMW 740i I used a credit card cash advance check for $50,000 so to get the travel miles. Paid the $30,000 balance with a business check.

I guess if someone appeared the flake a dealer might require a cashier's check, but I would be insulted if someone asked for that, especially after they got done running my credit info and checked what color underwear I have on, so to speak.

I would not ask the dealer what form of payment it will accept. That's sending a signal that you are a newbie and desperate /excited to get the MINI.

I have NEVER heard of a dealer holding up a deal because they need for a check to clear. At most a dealer might call your bank to find out if the funds are in the bank, but most don't do that, at least not to the customer's face.

All dealers want to seal the deal when you are on the lot [by giving you the car to take home that day.] This is because there is a very low percentage of people come back if they leave the lot without a car [dealer standards say that if someone leaves a lout without buying the car, there is about a 95% chance they won't be back. That is why salesmen try so hard to get your phone number or e-mail. So they can follow-up should you not get the car on the spot.]

Anyway, the easiest way to bind someone to a deal is to do all the paperwork and give the car to the buyer. The easiest way to not sell a car is to hold up delivery. By not taking possession you often times have the ability to change your mind or undo the deal. Sending you home without the MINI is foolish in any salesman's eyes.

Even if there was a hold period on the check [there should not be] in these days of instant bank transactions are you saying that you can't wait one or two days for a check to clear before getting the MINI? You do know that the days of seven to ten day check clearing times are gone, right?

I suggest you take a deep breath, contain your excitement and take steps to get the best deal on financing as you can. You could save $1000 to $2000 by doing so.

Maintaining discipline while shopping for a car is one of the most difficult things to do. I know it's hard to do, but try.

 

By the way, there's a thread in here discussing PenFed. Some people get financing instantly, others in three to four days, and many get rejected.

No one seems to know how decisions are made, but my suspicion is they look for any dings. Any ding = no loan.

That's another way of saying they are pretty strict. I think their review of an application is mechanical. They don't look at how something happened in the past and they don't ask questions.

So I don't think you should be looking at PenFed as an example of what all lenders will do with your app.

Shop around. That $10K down on any car is attractive to a lender, but on a MINI it should be a no brainer to a street smart lender.

 

Brought 22k in cash $$ Man those bills smelled good!Still can't find a tree air freshener with the same smell.

 

While others would run away, this might be more of a need than an option for you, so I applaud your bravery. Some times it helps to get back on track, even at a premium, with a secured loan.

Do they really allow you to refi your car after six months?

 

why not? it's not a mortgage. you can refi with another bank and the previous bank just thinks you're paying it off.

 

Most, if not all, auto loan contracts allow [or have to permit] one to refinance with another institution at any time. When I used to get car loans I often made "and or" agreements that said the loan terms by the dealer applied, but I had the option to get refinancing within the time stated in the loan documents.

Later, I think there were laws passed [may have been a California law] that automatically gave people the right to pay off a loan and get refinancing within so many days or months, without penalty.

Before that, institutions would have a provision that said if one paid a loan off early [by getting a better deal elsewhere] that one had to pay a substantial penalty.

Now, the fed or state law prohibits that. Maybe others can chime in on how it all works because I swore to never have a car payment again, back in 1990. I have held to that so I don't know how auto financing laws work nowadays.

 

MINI FS locked me in for 5.8%, but the dealers finance guy found me 4.99% with a bank (and I can get that at my CU as well). That's on $32K for 48 months (after a $4K+ downpayment).

 

If it was Clayton Autohaus they would've taken a much larger payment. I wrote a check for the full purchase price of the car plus tax/title/license and the fees I shoulda negotiated off but didn't. All told it was around a $28K check.

At the same time I couldn't get financed through MINI financail. I had a high credit score and a huge down payment, but couldn't get financed but at the time I had very little credit history.

 

I wonder if the dealer complied with IRS requirements and reported this transaction.

Here is my post on this issue in another thread. No way I want to kick a sleeping dog.

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As far as I know banks and other businesses are required to report to the IRS anyone who deals in a cash transaction in excess of $10,000 [by cash I mean the green stuff.] In other words, for example, if you deposit $10,000 in cash at a bank, the bank has to report it to the IRS. Go into a dealer and pay cash for a MINI, the dealer has to report the transaction.

http://www.irs.gov/businesses/small/...148857,00.html

The reason for this is that the IRS and other agencies want to check you out to determine the source of the money [drug sales, organized crime, money laundering, failure to report income.]

Where does the car dealer come into play? Well, if you pay the dealer in cash it has to deposit the money in their bank. So your cute cash payment is going to cause them all kinds of trouble. I suspect most car dealers would prefer not to start a chain reaction of inquiries by government agents. Moreover, the dealer has a separate duty to report your cash transaction, WITHOUT YOU EVEN KNOWING IT!

I'll write a personal check for that MINI in the corner, thank you.

 

Wow, that beats the $80,000 personal check I wrote to a car dealer. [It was actually two checks, one for $50K, the other for $30K.]

 

I put $1K down personal check to get the order in.
Paid another $5K down but included that in the cashiers check through my credit union. Credit unions typically have better interest rates than banks. I was 4.65% with anothe .25% off for making the payment directly from my savings account.

 

That's not a bad plan, for sure. When I used to get into financial slumps I could not get a good loan rate. I had to take the hit on poor financing terms, build up my credit rating, then enjoy the better loan rates on subsequent financing.

If you can't get better terms, set a goal of about two years to establish a stellar payment history and to pay off the loan.

Bonus Tip: Don't get caught up on APR. The dollar difference between a few percentage points is not all that much over the life of a loan. For example, three to four percentage on APR might be a few hundred dollars. It's not worth getting worked up over having to pay $500, for example, over 48 months. And IMHO when people spend hours trying to save one percentage point on a loan, well, that's a total waste of time.

You can go to any one of the many APR calculators to see the difference on loan amounts paid at different APRs.

Besides, what people should really be looking at are terms of the agreement. For example, what's the lender's policy on late payments, what's the penalty for late payment, how many payments can one miss before the lender can repossess the MINI [some lender agreements permit a right to repossess once a payment is 30 days late. While you think "that won't ever happen to me" all you need is a job loss or medical emergency to put you in a financially difficult situation.] Also, can the lender increase the APR if one is late on even one payment?

Generally, the more questionable lending institutions have draconian contract terms. Some are known to repossess vehicles 45 days after one is late on a payment.