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Old 08-07-2009, 12:23 AM   #1
ffrcobra_65
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Credit Union "Approved" letter good enough?

I have never purchased a car this way before but here is the situation...

I applied and got approved for an auto loan by my local credit union. They sent me a letter that says I have been pre-approved for $xx amount and once I found the car I want to purchase, to call the CU to complete the transaction.
A person at the CU explained to me that dealers will usually accept the letter of loan approval and based on that, will sell me the car and let me take it home, then I would have to take the Purchase Contract and Window Sticker to the CU, and the CU will send the check to the dealer. Does it work that way? Or the dealer won't let you take the car until they get the check?

I know some CU or other finance instutions will issue the check and you go car shopping. So I wonder if what my CU told me is something dealers also usually accepts.

Like I said, I have never bought a car this way before. I have always just had the dealer shop around for financing for me or bought car outright with cash.

I asked my dealer to shop around for me as well in case there are better rates than 4.99% out there.

No offense to some of you but please, let's try to stick to the topic
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Old 08-07-2009, 01:13 AM   #2
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Quote:
Originally Posted by ffrcobra_65 View Post
I have never purchased a car this way before but here is the situation...

I applied and got approved for an auto loan by my local credit union. They sent me a letter that says I have been pre-approved for $xx amount and once I found the car I want to purchase, to call the CU to complete the transaction.
A person at the CU explained to me that dealers will usually accept the letter of loan approval and based on that, will sell me the car and let me take it home, then I would have to take the Purchase Contract and Window Sticker to the CU, and the CU will send the check to the dealer. Does it work that way? Or the dealer won't let you take the car until they get the check?

I know some CU or other finance instutions will issue the check and you go car shopping. So I wonder if what my CU told me is something dealers also usually accepts.

Like I said, I have never bought a car this way before. I have always just had the dealer shop around for financing for me or bought car outright with cash.

I asked my dealer to shop around for me as well in case there are better rates than 4.99% out there.

No offense to some of you but please, let's try to stick to the topic
Unless the dealership has had multiple transactions with that particular CU, there isn't a snowball's chance in hell they're letting you drive off with a 30-40k car. JMO.
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Old 08-07-2009, 01:16 AM   #3
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No dealer will let take delivery until financing is secured...why would you want to do your purchase like this? Sounds fishy...
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Old 08-07-2009, 06:05 AM   #4
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Quote:
Originally Posted by ffrcobra_65 View Post
I have never purchased a car this way before but here is the situation...

I applied and got approved for an auto loan by my local credit union. They sent me a letter that says I have been pre-approved for $xx amount and once I found the car I want to purchase, to call the CU to complete the transaction.
A person at the CU explained to me that dealers will usually accept the letter of loan approval and based on that, will sell me the car and let me take it home, then I would have to take the Purchase Contract and Window Sticker to the CU, and the CU will send the check to the dealer. Does it work that way? Or the dealer won't let you take the car until they get the check?

I know some CU or other finance instutions will issue the check and you go car shopping. So I wonder if what my CU told me is something dealers also usually accepts.

Like I said, I have never bought a car this way before. I have always just had the dealer shop around for financing for me or bought car outright with cash.

I asked my dealer to shop around for me as well in case there are better rates than 4.99% out there.

No offense to some of you but please, let's try to stick to the topic
The way it's worked for us in the past is;

- You go and get preapproval from the bank/credit union
- Go to the dealer and find the car you want and do the paperwork
- Take the paperwork, invoice and window sticker back to the bank/credit union. Sign some more paperwork and they cut a check
- Take the check back to the dealer
- Now you can take delivery of the car

You can also call the bank and have the dealer fax the paperwork to them instead of driving there yourself but if you do this the bank will mail the check to the dealer so it will delay the time when you can take delivery of the car. No dealer will allow you to take delivery of a car until they have the check from your bank.
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Old 08-07-2009, 06:48 AM   #5
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You may have a "real" preapproval from your CU. If so, the dealer may accept it, no problem. The dealer may put you on a back up contract with another lender and deliver your car. You can then, within a few days, complete your transaction with your CU, and pay the dealer. The dealer will then cancel the back up contract. We use this method when the customer does not want to delay delivery.
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Old 08-07-2009, 07:02 AM   #6
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I had pre approval, but nothing in my hand from my credit union. The dealer finance manager said he would send the paperwork to them, but I gave him the fax number so he faxed it to them. I drove the car to the credit union, 75 miles away, and signed the loan documents and drove home. Either way, I would have taken the car home.

This is probably not usual. The last car I bought, I had to sit for several hours at the dealer waiting for the credit union financing, and they wouldn't let me drive it off the lot until they had a copy of proof of insurance on that vehicle.
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Old 08-07-2009, 10:46 AM   #7
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Quote:
Originally Posted by SSOOCH View Post
No dealer will let take delivery until financing is secured...why would you want to do your purchase like this? Sounds fishy...
Nothing is fishy about it at all. In essence, financing is secure, I have a pre-approved letter from the CU and the dealer can call the CU loan officer to confirm it if necessary. Not to mention, the dealer sees that my credit score is 865 and my wife's 850 and know that with our income, we can easily flop down the cash for the car or any car in their show room if it came down to it. I am not financing the whole car purchase price. Like many guys here, I just don't want to spend all cash for it and buy it outright. I'll put down a huge deposit and finance the rest. I bought and sold 26 cars, 5 motorcycles since I got my license in 1989. I have just never tried this route before so I am unfamiliar with the process

Quote:
Originally Posted by Wareal View Post
You may have a "real" preapproval from your CU. If so, the dealer may accept it, no problem. The dealer may put you on a back up contract with another lender and deliver your car. You can then, within a few days, complete your transaction with your CU, and pay the dealer. The dealer will then cancel the back up contract. We use this method when the customer does not want to delay delivery.
That makes sense a lot of sense. Thank you!


Well, I go and pick up my car tomorrow. I will deal with the financing then. But my dealer is very confident they'll be able to find a better rate for me. I will know tomorrow. I will report back here.

Thank you everyone for your replies. I appreciate it.
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Old 08-07-2009, 11:07 AM   #8
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Most dealers I've worked with will accept this. I even bought cars with a personal check as a good faith to the dealer that I will get the money to them even with them knowing I didn't have that much money in my checking account.
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Old 08-07-2009, 05:20 PM   #9
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Here's how it worked for me:

-Talked to my credit union and got approved for a certain amount.
-Went to the dealer and wrote them a check from my checking account for the full cost of the deal.
-Called up the credit union to tell them the purchase was finalized and they put the approved loan amount into my checking account.
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Old 08-07-2009, 05:53 PM   #10
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My experience has been that if you don't have an actual check, the dealer will have to fill out a loan application. They will then give you time (eg 5 days) to get a check from your CU. Then if you don't get a check to them, they will initiate financing based on the loan application.
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Old 08-08-2009, 02:29 AM   #11
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Quote:
Originally Posted by ffrcobra_65 View Post
I have never purchased a car this way before but here is the situation...

I applied and got approved for an auto loan by my local credit union. They sent me a letter that says I have been pre-approved for $xx amount and once I found the car I want to purchase, to call the CU to complete the transaction.
A person at the CU explained to me that dealers will usually accept the letter of loan approval and based on that, will sell me the car and let me take it home, then I would have to take the Purchase Contract and Window Sticker to the CU, and the CU will send the check to the dealer. Does it work that way? Or the dealer won't let you take the car until they get the check?

I know some CU or other finance instutions will issue the check and you go car shopping. So I wonder if what my CU told me is something dealers also usually accepts.

Like I said, I have never bought a car this way before. I have always just had the dealer shop around for financing for me or bought car outright with cash.

I asked my dealer to shop around for me as well in case there are better rates than 4.99% out there.

No offense to some of you but please, let's try to stick to the topic
Pardner, I didn't even have a letter. I told them I was pre-approved for $50K, wrote a check for the $500 deposit and ordered the car. Piece of cake, easy as pie!
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Old 08-08-2009, 02:51 AM   #12
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Normally what you do is get pre approved then put the car on your insurance. Then when your ready to buy you have the CU do a "draft" check or e-transfer to the dealership. That's about it. Just have to watch out for any odd fee's.

That's how I buy my POS project cars and never need to see an actual check from the bank.
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