Word of Warning about Financing Through PenFed!

Warpspeed · 04-29-2008, 12:18 PM

Hi,

Just wanted to warn everyone on this board who was thinking about financing through PenFed that they should only apply for the loan at the time of car delivery and not before that.

Why? You may ask...

Well, take my case for example. I applied for the Penfed loan about a week and the half before my car was due to arrive because I wanted to confirm that I could qualify for the loan and also becuase I read that the loan check from PenFed was good for 90 days. What I did not know, was that this check was unlike the 'blank' approved check from Captial One or most of the other financial institutions. On the very day the PenFed check is mailed out to you, you are already responsible for making payments on the interest for the loan, WHETHER you use the check for not

. This means that if your car was delayed for some reason, as in my case, the first payment is due to PenFed a few weeks after issue! I think I would consider this as daylight robbery as I do not see why a person should pay for interest on a loan that has been even loaned out? The money that PenFed has agreed to loan is still sitting with them, and has not been moved over to me, so, why am I responsible for making payments on interest on a loan that I have not 'taken' yet? Is this legal? :iono: So, if the check was valid for 90 days, even if I kept it at home and not used it, I will have to make 3 monthly payments to PenFed for money I never used.

Compared to the rest of the other institutions I have dealt with, as long as you have not cashed the check, you do not need to pat any loan interest payments. I should think this is logical, unlike PenFed.

The only way out of making that first payment, is to write void on the check and return it before the month is up, which I did. This way, even if my car was picked up next week, I will not be paying for the 3 weeks of interest for money I have never cashed.

I will continue to use PenFed because of their low monthly interest rate, but will only do so, when my car arrives.

Hope this serves as a warning for anyone looking to finance their car through PenFed.

MTTM · 04-29-2008, 12:27 PM

I just called PenFed as I had applied for a loan for a car not due here until June and you spooked me. They told me over the phone that you don't have a loan on the books with them until the check is cashed. Therefore, no payment due.

mistermojorizin · 04-29-2008, 12:28 PM

penfed certainly has some hoops you have to jump through. for me i bought my car on the 14th of april on an option contract and i had 7 days to get financing. on the 15th i applied for the loan with penfed and had it to the dealer by the end of that week. My first payment on the loan is not until the beginning of June however. So, I would say they give you more than a couple of weeks before the 1st payment (almost 7 weeks for me).

0002s · 04-29-2008, 12:30 PM

I applied for a Pen Fed loan (72 days in advance) and had them hold the check until 1 day before I picked up the car. I had them overnight the check to me for $11.00. My 1st payment was not due until the next month. They also let me choose my payment date.

You are not paying anymore money than the total loan amount. It's a simple interest loan. You only pay "x" principle and "y" interest. You are just paying the loan off without your car to drive.

rocketpop · 04-29-2008, 12:49 PM

It was my understanding that when you call to qualify for the loan it was good for 90 days and you did not have to request the check until a few days before you actually need it. I would think once they issue you the check you are on the hook for that money.

MTTM · 04-29-2008, 12:54 PM

You aren't on the hook. They send the loan documents after the check is cashed. How can you possibly be on the hook for money you haven't borrowed?

Warpspeed · 04-29-2008, 01:08 PM

Quote:

Originally Posted by MTTM

You aren't on the hook. They send the loan documents after the check is cashed. How can you possibly be on the hook for money you haven't borrowed?

- EXACTLY!

So, just to recap, and make sure that we are all on the same page when applying for a loan through PenFed.

1) If your car due date is still a ways out, apply for a draft pre-qualification loan for that amount. Than when you are about 3 days away, call in to get them to send you the check.

2) ONLY apply for a car loan if you are about to collect your car because, as I stated, you WILL be held responsible for making the monthly interest payments from the day they send the check even if you did not cash it.

I do not agree with the way PenFed makes you pay for interest on money you have not borrowed yet, I think that is daylight robbery

, as theoratically, the money is still with PenFed and they are already getting interest on it in some form or other. I question the legality of this. Other financial institutions do not hold you to these payments if you do not cash the check as rightly so.

0002s · 04-29-2008, 01:08 PM

Quote:

Originally Posted by MTTM

You aren't on the hook. They send the loan documents after the check is cashed. How can you possibly be on the hook for money you haven't borrowed?

Ask them, they consider the check (meaning mail to you) the loan. You start the loan the day the check is issued.

0002s · 04-29-2008, 01:10 PM

Quote:

Originally Posted by rocketpop

It was my understanding that when you call to qualify for the loan it was good for 90 days and you did not have to request the check until a few days before you actually need it. I would think once they issue you the check you are on the hook for that money.

EXACTLY, I asked this question and that's why I had them overnight the check.

MTTM · 04-29-2008, 01:15 PM

I must not have spoken to an informed person at PenFed then. They didn't tell me anything about a 2nd check. I was told to give the dealer the pre-qual check and then I'd get the loan docs after. Has anyone actually done this yet. How did it really work?

0002s · 04-29-2008, 01:16 PM

Quote:

Originally Posted by Warpspeed

I do not agree with the way PenFed makes you pay for interest on money you have not borrowed yet, I think that is daylight robbery

, as theoratically, the money is still with PenFed and they are already getting interest on it in some form or other. I question the legality of this. Other financial institutions do not hold you to these payments if you do not cash the check as rightly so.

Once you received the check you have a loan. Pen Fed isn't getting anymore or less interest on the loan that if they waited until 30 seconds before you picked up the car.

It's a simple interest loan. You could take the loan 1 year in advance and you would just be "pre-paying" your note off early. The total financed and the total interest would be the same as if you got the check the day you got the car.

The only difference is you are paying for a car you don't have the ability to drive yet.

0002s · 04-29-2008, 01:19 PM

Quote:

Originally Posted by MTTM

I must not have spoken to an informed person at PenFed then. They didn't tell me anything about a 2nd check. I was told to give the dealer the pre-qual check and then I'd get the loan docs after. Has anyone actually done this yet. How did it really work?

There isn't a second check.

I have done this:

1. Get approved and get an account number (they will see this in their computer)

2. Wait for dealer to get your car

3. Call PENFED and have them overnight the ONLY CHECK ($11.00 fee)

4. Ask PENFED for what ever day you want your payment on

5. Get car

6. Wait for paperwork and send out

The only real confusing think was to read all the paperwork that they send you and make sure the dealer files the right docs in a timely manner.

MTTM · 04-29-2008, 01:21 PM

My approval letter came with a check with a note on the check indicating the amount couldn't be over the amount I got approved for. I assume that's the check you got too? They told me on the phone the loan isn't taken out and no payments are due until the check is cashed.

0002s · 04-29-2008, 01:28 PM

Quote:

Originally Posted by MTTM

My approval letter came with a check with a note on the check indicating the amount couldn't be over the amount I got approved for. I assume that's the check you got too? They told me on the phone the loan isn't taken out and no payments are due until the check is cashed.

I got approved over the phone in 2 minutes. (PENFED never sent me a pre-check, ONLYthe check I gave the dealer) I then waited until my car arrived and called them to send the actual dealer check. I got the actual dealer check 1 day before I picked up the car. I actually started my car loan 1 day before I actually got the car.

You might want to recheck with PENFED. The day "MY" check was issued is the day I took out the loan. (PER PENFED)

What if the dealer doesn't cash the check for 45 days.....PENFEDS going to eat that %i? I have a car and PENFED has a note. Dealer cashing the check is not PENFEDS issue.

MTTM · 04-29-2008, 01:32 PM

If the dealer doesn't cash the check for 45 days the only person who lost out is the dealer. PenFed still has their money and you presumably don't need to make a payment for your first 6 weeks of ownership. We'd all hope to be so lucky!

Lax1bmw · 04-29-2008, 01:33 PM

Same thing happened with me. I called them and they advised for me to cancel the current loan and reapply when the time comes.

Should be ok?

Warpspeed · 04-29-2008, 01:40 PM

Quote:

Originally Posted by Lax1bmw

Same thing happened with me. I called them and they advised for me to cancel the current loan and reapply when the time comes.

Should be ok?

Yes. Do this.

They have already run your credit report to get you approved the first time to asked for the loan, so even if you cancelled the check, and had to re-apply, they will not run a credit check again. The approval is good for 90 days. Thus, the second re-application process should be 'approved' almost immediately. BUT, the previous loan check has to be cancelled first. SO, make sure you mail them back the check with the word Voided across it, and it has to reach them before the first payment due date.

Call in to overnight the check a day before car collection. PenFed is open 7days a week, 24hrs a day.

lib · 04-29-2008, 01:47 PM

At the end of the day you're paying the same thing. The only difference is if you start payments now or if you start payments in a few weeks.

You still make 24, 36, 48, 60 or 72 payments for the same amount.

Unless of course you have some sure fire way to double your money in the next month...

Warpspeed · 04-29-2008, 01:49 PM

Quote:

Originally Posted by lib

At the end of the day you're paying the same thing. The only difference is if you start payments now or if you start payments in a few weeks.

You still make 24, 36, 48, 60 or 72 payments for the same amount.

Unless of course you have some sure fire way to double your money in the next month...

Not unless you were holding the check for a month or two while waiting for the car to come in, and than decide that you did not want to get the car .....than you would be truly paying for interest for money you never really borrowed!

TunedM2C · 04-29-2008, 01:54 PM

I applied a few days prior to delivery and paid for the overnite check...done deal.

john970 · 04-29-2008, 03:07 PM

Another word of warning - I applied for a loan w/ penfed before I ordered my car in december, ordered it in late february and checked around to see if they could beat the rate. I did penfed again in march as they had the best rate, and I was turned town. The only thing I can think of that would have lowered my credit is the loan inquires themselves.

zbladejr · 04-29-2008, 04:13 PM

Very interesting. I applied for the loan yesterday, got approved on the phone (though did the online application to get the 4.25% rate) and the check was sent out FedEx today.

My car won't be here for another 4 weeks or so.....but, I'll be paying the loan off a bit earlier based on what you guys are saying.

So I'm thinking...whatever. Looks like I'll have the car for 71 months by the time my 72 month loan is paid off. How's that going to make a difference in my life. None. Zero. Don't care. If I was 3 months out, I guess I would be more concerned but at this point with the credit crisis looming and whatever else might happen, I'm just happy to be on my way to 1er blissdom.

But it's good to know this, and I suppose if I were to do it again I'd wait to have them send the check. Good luck y'all and get that 4.25% plus the $299 gap insurance....well worth it!

04-29-2008, 12:18 PM	#1
Warpspeed ONEZILA is here. 8 Rep 59 Posts Drives: Join Date: Mar 2008 iTrader: (0)	Word of Warning about Financing Through PenFed! Hi, Just wanted to warn everyone on this board who was thinking about financing through PenFed that they should only apply for the loan at the time of car delivery and not before that. Why? You may ask... Well, take my case for example. I applied for the Penfed loan about a week and the half before my car was due to arrive because I wanted to confirm that I could qualify for the loan and also becuase I read that the loan check from PenFed was good for 90 days. What I did not know, was that this check was unlike the 'blank' approved check from Captial One or most of the other financial institutions. On the very day the PenFed check is mailed out to you, you are already responsible for making payments on the interest for the loan, WHETHER you use the check for not . This means that if your car was delayed for some reason, as in my case, the first payment is due to PenFed a few weeks after issue! I think I would consider this as daylight robbery as I do not see why a person should pay for interest on a loan that has been even loaned out? The money that PenFed has agreed to loan is still sitting with them, and has not been moved over to me, so, why am I responsible for making payments on interest on a loan that I have not 'taken' yet? Is this legal? :iono: So, if the check was valid for 90 days, even if I kept it at home and not used it, I will have to make 3 monthly payments to PenFed for money I never used. Compared to the rest of the other institutions I have dealt with, as long as you have not cashed the check, you do not need to pat any loan interest payments. I should think this is logical, unlike PenFed. The only way out of making that first payment, is to write void on the check and return it before the month is up, which I did. This way, even if my car was picked up next week, I will not be paying for the 3 weeks of interest for money I have never cashed. I will continue to use PenFed because of their low monthly interest rate, but will only do so, when my car arrives. Hope this serves as a warning for anyone looking to finance their car through PenFed. __________________ Montego Blue 135I, Sports Package, Power Seats, IPOD/USB , Comfort Access, heated Seats, Grey Poplar Trim.
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04-29-2008, 12:27 PM	#2
MTTM Enlisted Member 1 Rep 38 Posts Drives: Join Date: Apr 2008 iTrader: (0)	I just called PenFed as I had applied for a loan for a car not due here until June and you spooked me. They told me over the phone that you don't have a loan on the books with them until the check is cashed. Therefore, no payment due.
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04-29-2008, 12:28 PM	#3
mistermojorizin Lieutenant Colonel 40 Rep 1,657 Posts Drives: 135i Join Date: Apr 2008 Location: Los Angeles iTrader: (0)	penfed certainly has some hoops you have to jump through. for me i bought my car on the 14th of april on an option contract and i had 7 days to get financing. on the 15th i applied for the loan with penfed and had it to the dealer by the end of that week. My first payment on the loan is not until the beginning of June however. So, I would say they give you more than a couple of weeks before the 1st payment (almost 7 weeks for me). __________________ "KOPEYKA" /// Titanium Silver / Black Leather / Gray Poplar / Sport Package / Premium Package / 6MT / Feb 08 Production
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04-29-2008, 12:30 PM	#4
0002s Mein Führer! I can walk! 45 Rep 822 Posts Drives: Not a BMW Join Date: Apr 2008 Location: Bunker iTrader: (0)	I applied for a Pen Fed loan (72 days in advance) and had them hold the check until 1 day before I picked up the car. I had them overnight the check to me for $11.00. My 1st payment was not due until the next month. They also let me choose my payment date. You are not paying anymore money than the total loan amount. It's a simple interest loan. You only pay "x" principle and "y" interest. You are just paying the loan off without your car to drive.
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04-29-2008, 12:49 PM	#5
rocketpop Captain 60 Rep 865 Posts Drives: 135i Join Date: Dec 2007 Location: Home iTrader: (0)	It was my understanding that when you call to qualify for the loan it was good for 90 days and you did not have to request the check until a few days before you actually need it. I would think once they issue you the check you are on the hook for that money. __________________
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04-29-2008, 12:54 PM	#6
MTTM Enlisted Member 1 Rep 38 Posts Drives: Join Date: Apr 2008 iTrader: (0)	You aren't on the hook. They send the loan documents after the check is cashed. How can you possibly be on the hook for money you haven't borrowed?
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04-29-2008, 01:15 PM	#10
MTTM Enlisted Member 1 Rep 38 Posts Drives: Join Date: Apr 2008 iTrader: (0)	I must not have spoken to an informed person at PenFed then. They didn't tell me anything about a 2nd check. I was told to give the dealer the pre-qual check and then I'd get the loan docs after. Has anyone actually done this yet. How did it really work?
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04-29-2008, 01:21 PM	#13
MTTM Enlisted Member 1 Rep 38 Posts Drives: Join Date: Apr 2008 iTrader: (0)	My approval letter came with a check with a note on the check indicating the amount couldn't be over the amount I got approved for. I assume that's the check you got too? They told me on the phone the loan isn't taken out and no payments are due until the check is cashed.
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04-29-2008, 01:32 PM	#15
MTTM Enlisted Member 1 Rep 38 Posts Drives: Join Date: Apr 2008 iTrader: (0)	If the dealer doesn't cash the check for 45 days the only person who lost out is the dealer. PenFed still has their money and you presumably don't need to make a payment for your first 6 weeks of ownership. We'd all hope to be so lucky!
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04-29-2008, 01:33 PM	#16
Lax1bmw Enlisted Member 0 Rep 43 Posts Drives: 1999 E36 M3 Join Date: Mar 2008 Location: NY / NJ iTrader: (0)	Same thing happened with me. I called them and they advised for me to cancel the current loan and reapply when the time comes. Should be ok?
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04-29-2008, 01:47 PM	#18
lib Major 141 Rep 1,401 Posts Drives: <This space for rent> Join Date: Apr 2008 Location: ATX iTrader: (0)	At the end of the day you're paying the same thing. The only difference is if you start payments now or if you start payments in a few weeks. You still make 24, 36, 48, 60 or 72 payments for the same amount. Unless of course you have some sure fire way to double your money in the next month...
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04-29-2008, 01:54 PM	#20
TunedM2C Brigadier General 829 Rep 4,190 Posts Drives: 2016 LBB M2 Join Date: Jan 2008 Location: Earth iTrader: (2)	I applied a few days prior to delivery and paid for the overnite check...done deal.
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04-29-2008, 03:07 PM	#21
john970 1er 73 Rep 1,205 Posts Drives: 08 135 Join Date: Feb 2008 Location: Denver iTrader: (0)	Another word of warning - I applied for a loan w/ penfed before I ordered my car in december, ordered it in late february and checked around to see if they could beat the rate. I did penfed again in march as they had the best rate, and I was turned town. The only thing I can think of that would have lowered my credit is the loan inquires themselves.
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04-29-2008, 04:13 PM	#22
zbladejr Second Lieutenant 6 Rep 231 Posts Drives: Join Date: Mar 2008 iTrader: (0) Garage List 2008 135i [0.00]	Very interesting. I applied for the loan yesterday, got approved on the phone (though did the online application to get the 4.25% rate) and the check was sent out FedEx today. My car won't be here for another 4 weeks or so.....but, I'll be paying the loan off a bit earlier based on what you guys are saying. So I'm thinking...whatever. Looks like I'll have the car for 71 months by the time my 72 month loan is paid off. How's that going to make a difference in my life. None. Zero. Don't care. If I was 3 months out, I guess I would be more concerned but at this point with the credit crisis looming and whatever else might happen, I'm just happy to be on my way to 1er blissdom. But it's good to know this, and I suppose if I were to do it again I'd wait to have them send the check. Good luck y'all and get that 4.25% plus the $299 gap insurance....well worth it!
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