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      02-23-2015, 03:06 AM   #1
idajica
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Forced BMW financing?

I went to my local dealer to buy a new X3, ready to pay in full with a personal check and a preapproved loan draft from my credit union. After agreeing to buy the car, both the SA and the Finance Manager said I had to also agree to a credit check so they could set me up for backup financing with BMW Financial Services in case my checks didn't go through. They said this is standard practice, even if paying full cash.

As we went through the paperwork I realized they did a hard credit inquiry and were asking me to sign a number of forms for this unwanted loan which would kick in if they didnt get funding from my credit union in a few days.

Both my bank and credit union vouched fully for both checks with them by phone. Am I to believe one is unable to buy a new BMW nowadays without getting backup BMW financing?

My credit score has now dropped because of the back to back car loan inquiries. BMW is sending their post sale survey soon and I am not happy. Thoughts?
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      02-23-2015, 07:52 AM   #2
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I think the dealership overstepped their bounds.

I can't talk for BMW USA, but I'm in Canada and I ordered an X3 in January as a cash buyer and there was definitely no credit check. I did not provide SIN (our equivalent to SSN) or any other info that I presume they would need to check my credit, nor did I have any intention to do so.

To be honest, I think you should make your greivance known to BMW USA's head office. I'd be curious to hear from other American cash buyers if this is indeed a new practice. I believe if anything they should just ask for an increased deposit if they are worried. If they take $2-3k from you in advance, they've covered all of their potential losses if you disappeared.
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      02-23-2015, 07:55 AM   #3
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Quote:
Originally Posted by Endre2 View Post
Sorry, but my first thought would be : if I don't have the cash , I don't buy it..... I would hate to drive a car that is owned by some f.... bank.
I wish you luck anyway with financing it and hope you will get your dreamcar.
?????

Did you not read his post??
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      02-23-2015, 07:58 AM   #4
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They're all doing it these days. They'll then site they need to do it for the Patriot Act, which of course is incorrect, but most of the time they don't have policies in place to do anything else to fulfill the portion of the law where they check you against the terrorist watch list.
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      02-23-2015, 08:01 AM   #5
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Quote:
Originally Posted by Endre2 View Post
Sorry, but my first thought would be : if I don't have the cash , I don't buy it..... I would hate to drive a car that is owned by some f.... bank.
I wish you luck anyway with financing it and hope you will get your dreamcar.
You pay cash for your house too?
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      02-23-2015, 08:05 AM   #6
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Quote:
Originally Posted by idajica View Post
I went to my local dealer to buy a new X3, ready to pay in full with a personal check and a preapproved loan draft from my credit union. After agreeing to buy the car, both the SA and the Finance Manager said I had to also agree to a credit check so they could set me up for backup financing with BMW Financial Services in case my checks didn't go through. They said this is standard practice, even if paying full cash.

As we went through the paperwork I realized they did a hard credit inquiry and were asking me to sign a number of forms for this unwanted loan which would kick in if they didnt get funding from my credit union in a few days.

Both my bank and credit union vouched fully for both checks with them by phone. Am I to believe one is unable to buy a new BMW nowadays without getting backup BMW financing?

My credit score has now dropped because of the back to back car loan inquiries. BMW is sending their post sale survey soon and I am not happy. Thoughts?
I think the dealer is trying to cover their a$$ and log your sale into their book. The one time I took out a loan from another source, I think I had to fill out the dealer's credit form as well. If you are not happy with their policy, you should not have agree to it and back out of the deal, but it would be silly in my opinion to back out of a deal for a few credit points.
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      02-23-2015, 09:25 AM   #7
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Originally Posted by Jordster View Post
?????

Did you not read his post??
you are right. Mea culpa !
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      02-23-2015, 09:47 AM   #8
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Quote:
Originally Posted by Endre2 View Post
Sorry, but my first thought would be : if I don't have the cash , I don't buy it..... I would hate to drive a car that is owned by some f.... bank.
I wish you luck anyway with financing it and hope you will get your dreamcar.
I would never pay cash for a car these days, may be different in Europe mainland but paying cash is far from the cheapest way these days.

You can contract hire a new car far cheaper than buying one, BMW, Mercedes, Audi etc. throw serious amounts of money into contract hire deals, amounts they could never be shown to be giving as cash off.

My mate just contract hired a new E350cdi AMG Line estate, which comes with Comand Nav, internet, Dab radio, leather, 9 speed auto, pdc front and rear, heated front seats, led headlights, media interface and the AMG interior and exterior packet for £330 a month with 6 months deposit.

So £13,500 over 3 years doing 45k miles.

That is a £43,000 car which would be worth around 45% after 3 years and 45k miles, even with a 10% discount on new, that would still loose over £20,000 if you paid cash for it.


My father contract hired his 730d sport for £420 a month, that was a £55,000 car that would have lost around £1100 a month if you bought it cash.


It now seems the cash buyer is not the sensible buyer in a lot of markets.
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      02-23-2015, 10:09 AM   #9
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My dealer also checked my credit even though I was paying cash, or in this case with a check. He said they can accept a check if it's a high credit score.
So unless you're paying true cash with $100 bills they may have to run your credit anyway.
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      02-23-2015, 10:37 AM   #10
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Originally Posted by gIzzE View Post
I would never pay cash for a car these days, may be different in Europe mainland but paying cash is far from the cheapest way these days.

You can contract hire a new car far cheaper than buying one, BMW, Mercedes, Audi etc. throw serious amounts of money into contract hire deals, amounts they could never be shown to be giving as cash off.

My mate just contract hired a new E350cdi AMG Line estate, which comes with Comand Nav, internet, Dab radio, leather, 9 speed auto, pdc front and rear, heated front seats, led headlights, media interface and the AMG interior and exterior packet for £330 a month with 6 months deposit.

So £13,500 over 3 years doing 45k miles.

That is a £43,000 car which would be worth around 45% after 3 years and 45k miles, even with a 10% discount on new, that would still loose over £20,000 if you paid cash for it.


My father contract hired his 730d sport for £420 a month, that was a £55,000 car that would have lost around £1100 a month if you bought it cash.


It now seems the cash buyer is not the sensible buyer in a lot of markets.
Well , 45% after 3 years seems very low to me. A BMW X3 has a resale value between 60 to 70% of the listingprice, after 3 years and maximum 70.000km. At least in Holland and Germany. This means: cash buying is the best.

http://www.autotrader.nl/auto/bmw-x3...tand-tot-70000
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      02-23-2015, 10:43 AM   #11
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Wow...I am surprised your BMW dealership would run a credit check on you if you are paying cash but I also can't understand why it would lower your credit score.

Here is my 2 cents. They probably ran a credit check on you because they want to sell you something else. I know my salesman wanted to sell me another car after he sold the X3.

Your credit score should not be lowered unless they put some kind "of lien" on your credit...meaning like monthly credit cards and utilities payments show up on your credit rating because it shows your ability to pay your bills and your delinquency(if you are paying your bills on time.) It also shows potential lenders who might have claims to your future earnings so if your dealership does not have any claims to it...get them off!!!

Are you sure you did not apply for some kind of BMW credit card or loan at the time of purchase?

It's pretty standard procedure if you are paying cash to hold your car until the cheque is "cleared" ...in other words they receive all their money in the bank.

I would contact your Credit Agency immediately to clarify the position you have with the BMW dealership...so you won't have any problems applying for loans or credit cards in the future.

I personally think you did the right thing paying cash for the car. I know people overspend because they think they can defer/spread out payments. I heard of one guy in the office saved the cash to pay for his M car but instead took a lease and put the money in the market. ( unfortunately he took some risky investments ) He had to sell at a loss his leased car because he need the money for his mortgage. He still has his house but no BMW.


PS I am not a lawyer or an accountant so please do not consider this as legal or financial advice. I do not live the US but I believe my financial services system is similar. Good luck.

Oh I forgot to mention I did pay cash for my car and no BMW credit check necessary. I also did the math for my personal TAX situation and there wasn't a major difference so cash was the best option for me. Sometimes the discounts are less with leasing or financing because the dealership understands the tax advantage for business owners so they charge you more or discount less. Remember the BMW Financing/leasing are in a way their own entity so they need to make their own margins...this is not a free service...but sometimes they have internal discounts not available to cash deals to promote leasing/financing which give you a better deal. You need to do the math.

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      02-23-2015, 11:09 AM   #12
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Quote:
Originally Posted by gIzzE View Post
I would never pay cash for a car these days, may be different in Europe mainland but paying cash is far from the cheapest way these days.

You can contract hire a new car far cheaper than buying one, BMW, Mercedes, Audi etc. throw serious amounts of money into contract hire deals, amounts they could never be shown to be giving as cash off.

My mate just contract hired a new E350cdi AMG Line estate, which comes with Comand Nav, internet, Dab radio, leather, 9 speed auto, pdc front and rear, heated front seats, led headlights, media interface and the AMG interior and exterior packet for £330 a month with 6 months deposit.

So £13,500 over 3 years doing 45k miles.

That is a £43,000 car which would be worth around 45% after 3 years and 45k miles, even with a 10% discount on new, that would still loose over £20,000 if you paid cash for it.


My father contract hired his 730d sport for £420 a month, that was a £55,000 car that would have lost around £1100 a month if you bought it cash.


It now seems the cash buyer is not the sensible buyer in a lot of markets.
I know nothing about the UK market.

In Canada, the lease and finance rates on X3 is 4.9% right now. I've been watching for a year and it never goes under 3.9%. If you have the cash, and you're not writing it off through a business, cash is the best way to buy.
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      02-23-2015, 11:13 AM   #13
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Quote:
Originally Posted by bmkman View Post

It's pretty standard procedure if you are paying cash to hold your car until the cheque is "cleared" ...in other words they receive all their money in the bank.
I gave them a personal check, 30 min later I drove the car home. The car was not held. It was also a bank holiday the day I provided them the check as well.
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      02-23-2015, 11:21 AM   #14
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Quote:
Originally Posted by Endre2 View Post
Well , 45% after 3 years seems very low to me. A BMW X3 has a resale value between 60 to 70% of the listingprice, after 3 years and maximum 70.000km. At least in Holland and Germany.

http://www.autotrader.nl/auto/bmw-x3...tand-tot-70000
That was my point though, what works for one market is completely different for another.

10 years ago buying cash was the sensible choice on a new car, but not anymore, not in the UK anyway, not with the stupid deals on contract hire and the finance contributions when using in house finance on certain models.


Prices are all over the place too, a friend of mine asked last year if he can buy a new E Class from the UK, to German spec. of course.
A new E220cdi in the spec listed above can be had for around £31,000, the same spec car in Germany is €49,000.

In the end he chose a company car, but the savings were huge. And a complete change around from 15 years ago when we were all ordering cars in the UK through dealers in the Netherlands and Belgium.
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      02-23-2015, 11:26 AM   #15
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When I go to pick up a car from a dealer, I bring a Cashiers check (aka Bank or Tellers check) for the exact amount of the purchase. With a cashier check, if the fund are coming from your account, the bank takes the fund from you account when they write the check and from that point the bank is willing to guarantee the check. This is what every car dealer I have ever dealt with wanted from me when I picked up the car.

If you go with a personal check, then I can totally understand the dealer telling you you can't have the car until your personal check clears...but having you fill out their loan application "in case my checks didn't go through" sounds very shady to me. I would never have done it.

I would definitely give them feedback on what happened via the survey.
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      02-23-2015, 11:28 AM   #16
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Quote:
Originally Posted by Jordster View Post
I know nothing about the UK market.

In Canada, the lease and finance rates on X3 is 4.9% right now. I've been watching for a year and it never goes under 3.9%. If you have the cash, and you're not writing it off through a business, cash is the best way to buy.

At the moment interest rates are going up, but they are wanting people to contract hire more and more, this means they keep control on residual values long term and they get a constant flow of decent use cars at the end of the term, but more importantly all discounts are hidden, there is no purchase price, just monthly rental.

On some models though they are still subsidising lease purchases, 6 series, 7 series etc. etc. have huge contributions.
640 sports had £19,000 finance contributions thrown at them before xmas, and you could get a further 12% off from the dealer too.
The interest on that was around £8000 over the loan period, so silly not to take the finance.

Not saying it is always the case, but not black and white like it used to be.
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      02-23-2015, 11:29 AM   #17
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Can't you just do an electronic transfer on cash purchases?
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      02-23-2015, 12:26 PM   #18
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Quote:
Originally Posted by Bruce24 View Post
When I go to pick up a car from a dealer, I bring a Cashiers check (aka Bank or Tellers check) for the exact amount of the purchase. With a cashier check, if the fund are coming from your account, the bank takes the fund from you account when they write the check and from that point the bank is willing to guarantee the check. This is what every car dealer I have ever dealt with wanted from me when I picked up the car.

If you go with a personal check, then I can totally understand the dealer telling you you can't have the car until your personal check clears...but having you fill out their loan application "in case my checks didn't go through" sounds very shady to me. I would never have done it.

I would definitely give them feedback on what happened via the survey.
I agree, a cashier's check is as good as cash and if he had a cashier's check, I am sure back up financing would not be necessary. Dealers usually want some sort of back up financing if one or both party wants to close the deal that day. Usually its the dealer who wants to close the deal just in case the customer change their mind or cannot come thru with the financing. The credit union usually want some sort of paper work from the dealer to process the loan, and those paper work can only be generated after the deal has been closed.
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      02-23-2015, 12:55 PM   #19
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Quote:
Originally Posted by The X Men View Post
I agree, a cashier's check is as good as cash and if he had a cashier's check, I am sure back up financing would not be necessary. Dealers usually want some sort of back up financing if one or both party wants to close the deal that day. Usually its the dealer who wants to close the deal just in case the customer change their mind or cannot come thru with the financing. The credit union usually want some sort of paper work from the dealer to process the loan, and those paper work can only be generated after the deal has been closed.
If the customer chooses to back out, even if the dealer did a credit check, the dealer can not take the funds from the finance co without the clients' signature. That's what the deposit is for. You simply can't force a purchase. You can sue for damages (unlikely, as the dealer will sell the car to someone else and the damages are unlikely to surpass the amount of the forfeit deposit).

Car purchases should always be done by certified cheque (check), also known as a bank draft. You can call the issuing bank to confirm the authenticity of the check, and I'm sure most dealerships do this to make sure they are not taking a fake document.
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      02-23-2015, 12:59 PM   #20
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Quote:
Originally Posted by Jordster View Post
If the customer chooses to back out, even if the dealer did a credit check, the dealer can not take the funds from the finance co without the clients' signature. That's what the deposit is for. You simply can't force a purchase. You can sue for damages (unlikely, as the dealer will sell the car to someone else and the damages are unlikely to surpass the amount of the forfeit deposit).

Car purchases should always be done by certified cheque (check), also known as a bank draft. You can call the issuing bank to confirm the authenticity of the check, and I'm sure most dealerships do this to make sure they are not taking a fake document.
Once the sales agreement has been sign, it is pretty hard to back out.
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      02-23-2015, 01:10 PM   #21
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Originally Posted by The X Men View Post
Once the sales agreement has been sign, it is pretty hard to back out.
Not really...

You can simply back out. Your deposit is forfeit.

The dealer must try to sell the car to someone else.

The dealer can sue you for damages, but unless your car is unsellable to anyone else (in theory), their damages are the amount of extra money it cost them to sell your car, not the total price of the car.

If the dealer sells your car the next day to someone else, their damages add up to basically zero. Since they have already forfeit your deposit, they have likely already been compensated for their damages.

Considering the cost of lawyers, it's unlikely that this will ever happen. My best guess is the standard practice for dealers when a customer backs out is to just keep the deposit and move on to try to sell to someone else.
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      02-23-2015, 01:31 PM   #22
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Quote:
Originally Posted by The X Men View Post
I agree, a cashier's check is as good as cash and if he had a cashier's check, I am sure back up financing would not be necessary. Dealers usually want some sort of back up financing if one or both party wants to close the deal that day. Usually its the dealer who wants to close the deal just in case the customer change their mind or cannot come thru with the financing. The credit union usually want some sort of paper work from the dealer to process the loan, and those paper work can only be generated after the deal has been closed.
I bought my last vehicle with a certified check from my credit union. I still had to fill out the top half of the credit application with name, address and social, I didn't complete the entire application nor did I sign it. The dealer needs that information to run their own credit/background check to comply with the CIP for a financial transaction.

https://www.privacyrights.org/custom...l-transactions

http://www.ofaciq.com/Resources/24.pdf
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