Something very interesting I just learned.Others may have known this already but new to me.

I've been paying 0% financing on my last couple of vehicles through Ford Credit and was expecting to be offered a low rate from MINI too based on my excellent credit rating.Which wasn't the case.

Anyway last week when filling out an online survey sent to me from MINI USA regarding my buying experience but specifically the financing experience through Vista MINI I made a comment about not being offered other choices from the Finance Manager and ended up signing for a higher interest rate (I know they profit from that also).MINI USA asked in the email if I wanted to be contacted directly to discuss the matter,which I did.

So I get a call from MINI USA that day and discussed with the CSR what happened and she told me that after I make my 3rd payment next month to call them directly and they will run my credit report again and offer me a lower finance rate then I was originally given or I can go with another banking institution (for example:Pen-Fed 4.25%).They also emailed me the payoff amount should I decide not to use MINI Financial.

 

i am not sure you will get the 4.25 from penfed since you are refinancing check it out first. when you refinance you usually get a higher rate. but i am not sure so check it out.

 

^^Actually I have been following Pen-Fed closely and the rate is the same for financing and also refinancing.I even used their online calculator to see what my "estimated" payment would be based on my current payoff amount which is lower then what I am paying now for the same amount of months financed.

I will certainly go with Pen-Fed if MINI Financial is still going to quote me a higher rate when I contact them next month for a refinance.If they match the Pen-Fed rate then I will remain with MINI Financial.

 

I plan on walking into the dealership with my PenFed check in hand and let them know I would be willing to rip up the check for the same rate and a few extra extras thrown in. I don't know how that's going to work but I'll sure let everybody know.

Is financing through Mini consistently higher than PenFed?

 

Which is a good decision to do and I wasn't even aware of Pen-Fed until I joined NAM.I can only do the after the fact at this point.

In my case yes but others on NAM were able to negotiate a lower rate with their respective dealerships using lower rates they could get from outside financial institutions.

 

I think sometimes people forget that interest rates fluctuate constantly. What may have been the norm and a good deal at one time may be impossible to get later. I'd never heard of PenFed before hearing about it here and it does seem that they are pretty low on their rates but that doesn't mean on any given day that they'll be best. Your case is interesting to me though. On most of my car purchases (with high credit score), the finance person has always mentioned several potential sources and they have always matched or beaten what I've found on the outside. The MINI finance guy told me that MINI Financial (aka BMWFS) had the lowest rate that day and it sounded reasonable to me. I'd have to see a couple of points less at least to interest me in re-financing and I don't see that happening.

 

^^I see what you are saying mtbscott.

I guess what got me wondering about the finance dept. was when I told Vista MINI what my FICO/Beacon score(which qualified for the lowest rate) was back in April and Lauderdale MINI (a nearby MINI dealership) gave me what I was going to pay monthly for a similiar '08 MCS but with some less options I was told that they lied to me and my FICO/Beacon score was lower.That was why I ended up buying from Vista MINI.

A twist on the old saying:"How can you tell a finance person is lying? Their lips are moving.

So my buying experience was great but now the service dept. and financing dept. have turned to be a huge let down from Vista MINI.

 

luckyduck, did you follow through with this idea? If so, what were the results?

 

They couldn't touch PenFed. They didn't even make a counter-offer or anything. They asked the rate (4.5%) and then said they would not be able to match it. Kind of bummed about that but it sure was a simple process filling out all the paperwork.

 

But did they make a stink about it, Luckyduck, or were they cool and let you take the car home without some bull$#!t hold?

 

They were completely cool about it all. They asked how I wanted to pay for it and I said I already had my PenFed check. They asked what the rate was then said they couldn't even match it. They didn't run my credit through MINI. They actually said PF was very simple to use, easy for them and me. The finance guy said PF was very good to its people.

All the forms came out, signatures all around, a few sales pitches for upsells (declined) and I signed over the check. Drove it out of the showroom. I had to leave my truck and pick it up later, I didn't anticipate everything going so well. Oh yeah, the PenFed check was around $300 short of the total amount so I wrote a check for the difference, I did anticipate that. PF only shows a few options so the check will be close enough for government work (har har) but may not be 100% of the amount.

Are they hassling you or are you just curious as to how it will play out?

 

The purchasers of domestic vehicles have been used to subsidized interest rates for years. They have become accustomed to seeing 0%, 1.9%, etc. offered on many domestic brands. Those are simply subsidized rates. No lender is actually loaning money for free (or nearly free). Typically you must choose between a rebate or a promotional interest rate. If you choose the rate, the manufacturer just uses the rebate cash to "buy down" or, in essence, pre-pay the interest for the loan. It doesn't take much thinking to realize that the car manufacturers are not borrowing all that money from their lenders at 0%. They are paying somewhere around prime rate. The auto brands offering rebates and interest specials are typically brands that may not be selling at a quick enough pace (supply exceeds demand). Therefore, they offer "incentives" to entice buyers. For the most part, brands like MINI, Toyota, Honda - to name a few - are selling virtually everything they can produce and may even have waiting lists for certain vehicles. When demand is close to matching supply (or exceeds it)....it would border on stupidity for the manufacturer to say, "Hey, let's offer a rebate on those vehicles" or "Let's pay prime rate for our cash and then offer it to our customers for 1.9% or even 0%". It's just not necessary. Concerning differing rates between lenders: As a general rule, credit unions will have a lower interest rate than banks since credit unions don't have to pay taxes in quite the same way as banks do. Their overall costs of doing business is lower due to that and they pass along the savings to their members. Most financial arms of manufacturers (Ford Motor Credit, BMW Financial Services, etc.) are classified the same as banks (and have to pay tax on earnings). This status will typically cause their normal interest rates to be competitive with banks but not necessarily with credit unions. Yes, the dealerships do have an opportunity to make some profit on financing. For the most part - dealerships offer financing from multiple lenders who charge the dealership a rate called the "buy rate". Think of it as a wholesale discount on money. The buy rate may be anywhere from a fraction of a percentage point to a couple of percentage points lower than the average bank loan rate. This gives the dealer an opportunity to make a little profit and still offer a competitive rate. It sometimes gives the well qualified buyer (very high credit score) an opportunity to negotiate the rate. Most dealers use good business sense when offering financing. They'd rather make a little less profit on the percentage rate to keep your business in house rather than let you borrow from an outside lender. However, everyone has to understand there are limits. If the dealer's "buy rate" from their best lender is 5%.....they may offer to loan that money to a customer for 6% or 6.5%. But, if the customer says, "my credit union is offering 5.25%" the dealer may choose to match the CU rate and still make a little profit on the loan. If the consumer says, "My credit union is offering 4.5%" the dealership cannot come out by paying 5% for the money and then loaning it for 4.5%...so...they typically must say, "That's a great rate! We don't currently have anything available to match it." It's not that they don't want to finance the car for you....it's that they can't lose money. It is business, after all.