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car loan for Ascent

9K views 34 replies 11 participants last post by  Jim_in_PA 
#1 ·
Hi everyone,

It is great to be here! I have learnt a lot in this forum, and am about to pull the trigger for my 1st Ascent and my first car in the next few days.

I have a question about mortgage that nobody seems to talk about. If you settle down on a price with a dealer, where do you get the loan from? the same dealer or from a 3rd party? Is there any dealer fee associated with it (btw I am in NJ)? I am planning for 0 down with monthly loan payment. I guess that monthly number could be a good metric for overall cost of the purchase.

Thanks,

DL
 
#2 ·
The dealer, banks and credit unions are all sources for auto financing. I personally use a credit union. Your personal credit score is also going to factor into both your loan source and your loan cost.
 
#3 ·
Thank you Jim.

I am just wondering how the process is like. Let's say I am going to finance through the dealer, because Subaru now has promotional 3.49% APR and it is also convenient. Do I have to pay extra fee (e.g. bank fee, origination fee, or doc fee) for such loan?

Thank you!

DL
 
#4 ·
There typically isn't any upfront fees and keep in mind that 3.49% APR with Subaru is with "qualified credit" (i.e. you need to have "good" credit score typically). The size of your loan and your APR is going to depend on a combination of your credit score and your income. I would suggest getting a free credit report up front in case you don't know what yours is (see https://www.consumer.ftc.gov/articles/0155-free-credit-reports). I would also start with your Bank or Credit Union first to see what they can offer you (it could be a better deal than the dealer offers).

Also, keep in mind running your credit for a loan dings your credit score. That said, multiple loan applications (i.e. shopping around) in a short time typically counts as a single ding.
 
#5 ·
Those are very nice suggestions. Thank you! I will make sure I shop around to avoid many hard pulls of my credit report in a short time.

I hope my credit score (~800) and income should be qualified for 3.49%. The reason I am looking to dealer finance in the first place, is my local credit union could only do as good as 3.49%. So I would prefer loan from dealer finance, if there is no upfront fees.
 
#6 ·
It's a good idea to come into the dealer with a loan aleady in place from a bank or credit union. It will give the dealer a number which they will try to beat. Let's say you come in with a 3.49% loan in your back pocket. The dealer may counter with 3.25% +/-. If you don't come in with financing in place, then you get what they offer you, which might be decent, but could be better.

If you take the lower dealer offer, then it's a good courtesy to inform your bank/CU that you will not be using their financing. They're used to being "rejected" - It comes with their territory. It also keeps them for hounding you if you inform them that you're no longer in need of a loan.
 
#7 ·
PenFed has 2.49% ... check other credit unions if your's doesn't have better numbers, especially if your credit score is where you say it is. You CAN do better than 3.49%
 
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#9 ·
Actually, I think there are way too many folks who settle for dealer-obtained financing. Some of that may be from "get it done so I can drive my new car off" aspirations as there really are a lot of folks who don't plan ahead on a vehicle purchase. (For the Ascent, many of us have had to wait for factory orders so that at least helps) There are a lot of rides that are purchased "impulsively" or at least expeditiously.

I find it to be a good practice to "stay aware" of the financial marketplace for things like auto loans, credit cards, insurance, etc. Things are constantly changing. That doesn't mean constant hard research; just look into what's going on from time to time. The auto loan business is very competitive and dynamic. It's lucrative for dealers because with a semi-captive audience, they can earn a few extra shekels on a deal by placing loans. But as individuals, we all hopefully feel we have a responsibility to make sure we are getting the best financial deal available to us.

My approach has always been to try and arrange for my best available option(s) before I actually talk to a vehicle sales person. Once the deal is struck, they then have the option to match or beat. I've had it go both ways. I've mentioned previously that for our MY11 Outback Limited, the local dealer matched the 1.49% financing I had available with a bank and I let them place that loan. They made a few bucks and we got the rate. They couldn't match on our MY16 Outback Limited with Eyesight, so PenFed had that loan. Same is currently true with my Ascent...they don't currently have a better deal or a match for me based on their current crop of financial partners. So I have 2.49% with PenFed, check in hand, ready for my delivery in hopefully the next week or so. I could have lowered that to 1.49% if I wanted to play the "TrueCar" game and waist a bunch of dealers' time, but as I've mentioned previously on this subject, it wasn't worth the hassle for a few hundred dollars in interest over a three year loan. I'm paying this vehicle off quickly due to a new income source.
 
#11 ·
We looked at my bank BOA and were told their lowest rate was 3.25% for 5 years at the time. We looked at Chase and as a preferred customer we were also told 3.25% for 5 years. When we went to the dealer we asked them to look into financing and wanted a 3 year loan. The finance guy screwed up and put it down for 5 years and with BOA they Offer 4.5%. My wife hard stopped him in his tracks. When he re-did the paper work for 3 years Chase showed as 3.25% which is what we expected so we went with it.

Our key to all this was we wanted a loan that wouldn't charge us a pre-payment penalty if we dumped more money into the loan to pay the car off early.
 
#14 ·
Hi everyone,

It is great to be here! I have learnt a lot in this forum, and am about to pull the trigger for my 1st Ascent and my first car in the next few days.

I have a question about mortgage that nobody seems to talk about. If you settle down on a price with a dealer, where do you get the loan from? the same dealer or from a 3rd party? Is there any dealer fee associated with it (btw I am in NJ)? I am planning for 0 down with monthly loan payment. I guess that monthly number could be a good metric for overall cost of the purchase.

Thanks,

DL
That's bold!!! I assume you're in your teens or early 20s, that's gonna be a challenge to get a decent loan.

I pay $705/mo for 5 years @ about 1.8%APR or so from a local Police CU.
 
#17 ·
By all means go with the term and rate that's best for you. I'm only doing three years on the Ascent Tourinig (and never go more than four normally) so my friends at PenFed have an acceptable deal for me without my jumping through hoops. I was only using them as an example of a credit union and credit unions often have some of the best rates available for their members. Unlike years ago, pretty much anyone can join a credit union at this point.
 
#18 ·
Have Financing Locked Up Before You Buy

Since my first car purchase (a long time ago), I always get a loan approved before I shop for a car (nowadays I pay cash).

Keep in mind, if you go through Subaru, it gives the Finance Guy one more shot to sell you stuff you don't need (and don't want). "Credit Life Insurance" is one of the biggest car loan scams going.

My Finance Guy was a total jerk about pressing me to buy all sorts of crap I had told him - repeatedly - I did not want. And mine was a straight cash deal which should have taken 3-5 minutes. The worst closing on a car I have ever experienced. Subaru should be ashamed of this behavior. But, apparently they give their blessing to it.
 
#19 ·
Subaru doesn’t control the local dealer or their finance guy. The finance guy at most dealers are responsible for profit and they get more by selling you high price high margin items. Most are jerks as others have said. I just keep saying no to every extra and eventually they get it. I did have to walk out on a Ford dealer’s finance guy. Still don’t own a Mustang. Subaru will only know about bad experiences with finance guys if you tell them - either call or in the survey. Enough negative feedback and they may do something.
 
#25 ·
Same for me when I bought my 17 Outback a few years ago. It was my first new car purchase, and I was very guarded the whole time (the sales guy even busted my chops about it, to the delight of the Mrs.). I thought for sure the finance guy was going to throw something in there, which made me stare at the papers for twice as long before I signed (looking for something that wasn't there).

Best of luck to the OP, let us know how it goes!
 
#21 ·
Thanks everyone. I would like to share some updates so far. Hopefully it helps with other people who haven't pulled the trigger.

- It seems to me most dealers can only do 3.49% APR per Subaru promotion, which is high. So going to external leander and get a pre-approval is probably a good idea.
- Pen Fed is nice and quick. I just signed up and was approved their membership instantaneously. Their eligibility requirement is loose. I am not related to military by any way but still get approved. Auto loan pre-approval is pending.
- I have a local CU pre-approval of 2.74% APR. Pen Fed will be my backup in case something goes wrong.
- I am now negotiating for a deal with 12% off MSRP for KCB model. I can probably get it if wrapping up the deal in two days (by end of month).

One more question: how many days does it usually take to finalize the loan and the purchase? I am not familiar with the process. Since I am doing an auto loan, do I have to get the paycheck from lender in advance, before signing the paperwork with dealer? Or all 3 parties have to meet together for a closing? Btw, I am taking home delivery. I will not go pick it up in dealership.

Please advise. Thanks!
 
#22 ·
Usually, with a pre-approved auto loan, the lender provides you with a draft (check) that you complete when you close your vehicle deal and fill in the final amount that is equal to or less than you were pre-approved for. That's one of the advantages of walking in the door with a pre-approved auto loan. The draft is "good" for 60-90 days, depending on the lender. PenFed's is good for 90 days. If you do not use the draft, it becomes void at the end of the period. It's not an actual loan until the draft is submitted for payment by the dealer to the lender.
 
#24 ·
The draft is an actual check...so yes, it's sufficient for signing. Using the draft/check puts the loan in force.
 
#26 ·
Penfed is a great choice for an automobile loan or a home mortgage loan. You could always take the dealer loan as they might discount the price of the vehicle a little more, then switch over to a credit union a few months later at a better rate.

Presently, I am paying 2.8% on my home mortgage through Penfed.
 
#27 ·
Not to side-track the discussion but I think I realized why I wasn't getting offered the lower rates with my credit rating and it's because we have been doing the 60 month loan options and I think most folks in this thread have been quoting rates for shorter loan duration. I looked around online and seems like we are getting a competitive rate for 60 months. I hadn't realized how big a delta the rate is for sub-60 month.
 
#28 ·
Yes, 24 month, 36 month and sometimes 48 month loans often have more attractive finance rates...which is one reason I'd never do 60 months unless it was at zero percent interest and didn't screw up the ability to negotiate a good price on the vehicle. (someone has to pay for the "free" interest and it's not the dealer/manufacture usually tapped for that ;) )
 
#29 ·
The loan rate also varies for the legal status of applicants. In my case, I am not even a green card holder and am renewing my work visa year by year. That really limits my choice of loan, both in rate and term. My local CU offers 2.74%. There is a big CU in NYC area which offers as low as 2.09%. Unfortunately I have to have green card in order to qualify. Term wise I was planning to do 5 year, however, it turns out lenders could only grant it to expiration date of my work visa, literally reducing my term to about 1 year. It is sad.
 
#30 ·
That is disappointing for you, but it's understandable about the term limitation simply because there are some folks who would "just leave" and abandon a vehicle. (I'm not suggesting in any way, shape or form that "you" would do that!)

What about a short term lease? Perhaps there's an independent leasing company that will work with you based on your status and timing.
 
#31 · (Edited)
Jim - thanks for the suggestion. We have decided to pay cash for this Ascent. We do have some saving that was planning to pay our home mortgage, as its rate is higher than auto loan. But we didn't find out until today how our alien status is limiting us. To your question about lease, I was thinking about lease from the beginning. However, Subaru doesn't lease well, mostly because it doesn't have a capable finance company like Toyota or Honda, thus money factor is high and monthly payment is high. So it is better to buy Subaru than lease.
 
#32 ·
While using your cash isn't the most comfortable thing as you state, it "is" a way forward and having a whole 10 miles on my new Ascent right now, I can still tell you it's worth it. :D Relative to my leasing comment, "independent leasing company" was the key phrase. These are companies that help businesses and individuals do leases on eligible assets and they are not tied to any one company or industry. They can sometimes be quite creative. Your situation wouldn't lend itself (pardon the expression :) ) to typical dealer offered vehicle leases for some of the same reasons you stumbled on challenges with a loan, regardless of the brand. That bites, but it is what it is.
 
#34 ·
Yeah I understand. I don't blame anyone, except existing immigration system. Speaking of financing options, most dealers seem to only work with Subaru/Chase, and a few also work with Wells Fargo. I believe there is such independent leasing company, but my guess is that may also come with a price. :)

Enjoy your Ascent! I am really looking forward to mine. Delivery will be next week.
 
#33 ·
Doesn’t sound like it applies in this particular situation, but in case it helps others, there are sites such as swap a lease that help you get out of a lease easier. I’ve never leased myself, and never actually used this site, so do your own research and insert all of the usual disclaimers. But a guy at work was talking about it last month and it stuck in my head. A website for everything.
 
#35 ·
I think you would be surprised at how reasonable an independent leasing company can be...sometimes, they even have better money factors and they certainly have more flexibility. That said, you will enjoy your new Ascent when it arrives. I enjoyed mine today for 170 miles of frolic behind the wheel. :) :D
 
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