An amazing thing came in the mail yesterday. Got a letter from Bank of America, they did the financing on my new Mustang. The letter thanked me for my business and then it said they had looked at my contract and found that they could give me a lower interest rate than what had been arranged originally so they lowered the rate on my note.

Now, it was no big amount, only lowered it by two tenths of a percent, lowering my monthly payment by $5.

But, how often does anything like that happen? I mean, I had already agreed to the original interest rate and signed the contract for it so they had no obligation to do this.

Never has happened to me in the past, never heard of something like this happening to anyone else, just surprising to me.

 

Eh knowing BoA they got caught trying to scam customers and had to legally reduce your rate. They phrased it so you'd be happy instead of pissed.

 

That is pretty surprising. I think with a loan like an auto loan there's a little leeway in how the contract can be modified without needing to resign. On my loan they were able to extend it by up to three months without needing to get a new contract from the bank.

 

This thought had crossed my mind.

 

My favorite thing is when the dealer says you're approved for the loan then you sign papers and go home. Two days later they call you asking you to come down to sign a paper, then they say its a higher interest rate or you didn't get approved. I saw this happen at a jeep dealership and this guy was yelling loud at the finance guy in the middle of the sales floor. It happened to me when I was 19 and I just said PEACE!

 

The dealer tried that with me and I told them to take the car back.

 

Yup, that's part of the "bait and switch" con. I never leave the dealer with a car without a signed and fully documented contract.

 

Not exactly true.

Many dealerships do paperwork with a rate that they THINK they will get from the bank. If they are incorrect, then they have to get you to come back and resign at the different rate. Is is proper? not at all, but it happens all the time in "spot delivery" states (states where you take immediate delivery of the vehicle).

It's not really a bait and switch, but they are not letting you leave without a car and continue your shopping. They feel that once you show everyone your new car, it is much easier to have you come in and sign at a higher rate if need be than tell all your family/friends that you couldn't get financed. It's a very ****ty tactic, but unfortunately not illegal.

The important thing to remember is that you are ultimately in control. Just tell them to either get the financing done as contracted, or take the keys back.

The reason the OP got the rate reduction is that the Delaership wrote the contract at a higher rate than the bank's rate. If it is just a small amount, they can adjust it internally like they did. If it is a point or two too high, you would have needed to resign.

 

I gave my dealer a cashiers check. :easypeasy:

 

That's great - How does that in any way answer the OP's question?

 

What was the question? Oh I see it. How can anyone answer that? Answer is "one can't answer that"

 

Didn't know anyplace let you take a car that the financing wasn't already locked in. They all do it electronically these days, finance rate is determined and the financing company makes its approval decision right away.

And the dealership didn't write the contract for any rate other than what was approved and determined by the finance company.

Something happened post approval at BOA.

 

Most dealerships (including the one I run) do not always get approvals PRIOR to contracting the vehicle. We use guidelines that are posted by the bank as a reference, but do not always get preapprovals - cold fact.

We can submit applications electronically, and fund electronically, but if an analyst needs to look at before issuing an approval it can take a couple of hours.

Unless you physically saw the BofA approval before you signed the contract, they may not have had it 100% approved - no matter what they told you.

 

If the dealership set up the financing, they usually ad some percentage points or tenths for themselves, so they end up making money even off the financing.

I guess it could be that the bank bought the contract from the dealership and had the OP re-sign for the new % , with BoA ending up making more money in the end.

My thinking has the original buy-rate from the dealer being let's say 3%, the sale-rate to the customer something like 4.5%, and if the bank re-does the contract for the customer to now see a saving, say a 4% rate, they're still making more than the original 3%

By the way, my interest rate is 2.49% and it was the buy rate since I worked at the dealership and they didn't mark it up

 

I can attest to this. When I got my car I walked into the dealership saying I wanted a certain interest rate, not zero but pretty **** close to it. They agreed to the rate out the door, but it took them a couple weeks to find a bank to agree to it. Even got a couple denial letters in the mail.

 

Never finance through the dealership. Join a credit union. Better rates. And when you are approved (usually less than an hour after a simple phone call for me), there's no 'come back to sign something while we change the terms' crap. I have my check in an hour. My Ford dealer is half a mile from my CU.

I've bought or leased 8 new vehicles from my dealer since 2006. The only time I financed through the dealer was when Ford Motor Credit offered (an additional) $1,000 rebate to finance through them. It was about .75% higher than the CU. My first (and only) payment to FMC was to pay the loan off - using a check from my CU: I refinanced it at the lower rate and still got my $1,000 rebate ...

 

I finance through whoever has the best rate. I agree that going into a dealer with your financing already set up through a credit union is a good tool to help you negotiate. I had Mazda credit drop a full point on a car loan versus my credit union. Being prepared and doing research is never bad advice.

 

That's good advice. I haven't made my first payment yet but, I should kick myself for not touching base with my credit union for the loan. I don't know what I was thinking. I'll be going in and discussing the possibilities of my credit union financing the red rocket tomorrow.

 

You do realize that the manufacturers most of the time have the BEST rates for people with good credit, right? No credit union offers 0%,...well at least I've never heard of it. Truecar pricing and 0% is nice!