Financing

[Cashburn]

We work with customers to get financing on our builds.

[patrickt]

Originally Posted by Cashburn

We work with customers to get financing on our builds.

I don't want to throw gas on a fire or anything, but what kind of interest rates do lenders want on something like that? What sort of down payment do they like to see?

[jhv48]

I went to my credit union and got a loan secured with a cash deposit account (equal to the amount borrowed). Thus, no credit check. Piece of cake. The interest rate on the loan was 1% higher than the yield on the account.

[patrickt]

Originally Posted by jhv48

I went to my credit union and got a loan secured with a cash deposit account (equal to the amount borrowed). Thus, no credit check. Piece of cake. The interest rate on the loan was 1% higher than the yield on the account.

But if you have the money to deposit in to an account to secure the loan, why would you need the loan in the first place?

[RodKnock]

Originally Posted by patrickt

But if you have the money to deposit in to an account to secure the loan, why would you need the loan in the first place?

Are you serious? People with money in the bank get loans all the time. I think the term they use in finance is called leverage.

[patrickt]

Originally Posted by RodKnock

Are you serious? People with money in the bank get loans all the time. I think the term they use in finance is called leverage.

Why would you put fifty grand in the credit union account so you can get a fifty grand loan from them for 1% more than what the account earns? (You have to leave the money in there, too.)

[jhv48]

Because this way I got a 1% loan.

I didn't need the money I secured the loan with (it was just sitting in an interest earning account) and didn't want to pay out the cash at the time of purchase. I wasn't sure I was going to keep this particular car very long (I only kept it two years).

The next one I paid cash for, and that one hurt!

[RodKnock]

Originally Posted by patrickt

Why would you put fifty grand in the credit union account so you can get a fifty grand loan from them for 1% more than what the account earns? (You have to leave the money in there, too.)

Well, there are certainly more complex examples of leverage, but certainly the need to establish credit might be a reason. There are others, but this is boring.

I'm curious how long you have to leave the money there. Often, you can pull the money out within 3 months.

First Republic Bank is one bank that's notorious in wanting your money before they make loans, but then they cater a wealthy clientele.

[Cashburn]

Originally Posted by patrickt

I don't want to throw gas on a fire or anything, but what kind of interest rates do lenders want on something like that? What sort of down payment do they like to see?

It is all over the map and comes down to the bank and how much we are willing to carry for them since most banks will not write the check until an appraisal. I don't know off hand what the actual rates are but I believe you can get about 8% or so with a 20 - 30% down payment.

We have recently been successful with a military bank, which is good news for any of our military customers. It helps that a BDR carries a legit MSO with 17 Digit VIN and is not sold in kit form.