PenFed Payment Saver Deal...

[Vectors2final]

I got approved!

Just got to get the deposit in(respond back with info), and the order is set!

[chiplee]

Originally Posted by Vectors2final

I got approved!

Just got to get the deposit in(respond back with info), and the order is set!

Congrats. I used this product, too. Approval was actually too fast, lol. They sent the check before I had time to tell them I wanted it expedited. It all worked out in the end.

[edwinm3]

funny, I called them recently and asked if they did ED and they've never heard of it.

[X2Board]

Originally Posted by edwinm3

funny, I called them recently and asked if they did ED and they've never heard of it.

It depends on who you get on the phone. I had the same experience the first call, hung up and called back, got my 45 day deferred payment. This was after the automated approval.

[chiplee]

Originally Posted by edwinm3

funny, I called them recently and asked if they did ED and they've never heard of it.

There's nothing for them to "do" about ED. You just tell them you're buying a car, tell them who you're buying it from, and tell them what you're paying. They cut the check. Simple as pie.

[edwinm3]

Originally Posted by X2Board

It depends on who you get on the phone. I had the same experience the first call, hung up and called back, got my 45 day deferred payment. This was after the automated approval.

gonna ask again to see but already approved with BMWFS

[Vectors2final]

Originally Posted by chiplee

Congrats. I used this product, too. Approval was actually too fast, lol. They sent the check before I had time to tell them I wanted it expedited. It all worked out in the end.

Approval was really fast as well. When I applied, it said that it was being reviewed because they still needed the VIN. Maybe six hours later when I woke up and checked the status it was approved.


Didn't see any reason not to. Having a significantly reduced monthly at these rates is awesome. I'm most likely going to keep it for a while, but I'll let time be the judge of that. The money will be there should I decide to keep it.


You had a VIN? Did you just go to a regular dealer, or?

[chiplee]

Originally Posted by Vectors2final

Approval was really fast as well. When I applied, it said that it was being reviewed because they still needed the VIN. Maybe six hours later when I woke up and checked the status it was approved.


Didn't see any reason not to. Having a significantly reduced monthly at these rates is awesome. I'm most likely going to keep it for a while, but I'll let time be the judge of that. The money will be there should I decide to keep it.


You had a VIN? Did you just go to a regular dealer, or?

I used Bavarian (military sales). Yes I applied for the loan once I got my VIN. It was literally approved in minutes. I figured I'd get a call once I submitted the app, so I didn't even fill the app out carefully. Crazy considering we had just applied for my wife's 2015 X5 a few weeks earlier.

[Vectors2final]

Oh, okay. I'm using Pentagon military sales.


They wanted proof of financing, and a deposit to get it going, so I just applied. I have 90 days to get a VIN, which is reasonable. If not, I'll reapply once I have one.


That makes February 26th day I need to get going... I'd really like for my wife to pick my car up before I get back. We've got a trip to go on, and I'll be short for time.

[chiplee]

Originally Posted by Vectors2final

Oh, okay. I'm using Pentagon military sales.


They wanted proof of financing, and a deposit to get it going, so I just applied. I have 90 days to get a VIN, which is reasonable. If not, I'll reapply once I have one.


That makes February 26th day I need to get going... I'd really like for my wife to pick my car up before I get back. We've got a trip to go on, and I'll be short for time.

Hmmm, Bavarian just made me get pre-approved with their lender. Probably because they knew I'd be waiting 6 months.

Safe travels home from Korea. It'll be quite the homecoming if you call pull off the wife picking up the M3 before you get there.

[Vectors2final]

Well, I was just told that they have production spots for February, and delivery in late April. I guess I could have done pre-approval with SCU, but it's no biggie. If I get that February production slot, this works out. Seems promising.


Thanks! I appreciate that.

[F82speed]

I haven't yet called to ask PenFed this directly, but I'm guessing you guys already know the answer: maybe I'm just being dense, but if the residual isn't guaranteed then what are the implications? Assuming the balloon payment amount is fixed per the financing agreement, then what...?

[chiplee]

Originally Posted by F82speed

I haven't yet called to ask PenFed this directly, but I'm guessing you guys already know the answer: maybe I'm just being dense, but if the residual isn't guaranteed then what are the implications? Assuming the balloon payment amount is fixed per the financing agreement, then what...?

Think of the balloon as your last payment. It's due at the end of the loan regardless of vehicle value. Most people will sell, trade, or refi by then though. The only downside to this product is that interest is paid on the entire loan amount. Principle is based on loan amount less residual, hence the reduced payment. If you compare this loan to a 60mo 2% traditional loan I contend the numbers are in favor of the payment saver loan. You will save/keep a little less than the amount of the balloon over the next 60 months. You should have no trouble earning enough interest on that money to cover the full interest of the loan and the difference on the balloon, and that's being conservative. This loan is a bad idea if it's the only way you can afford the car, but a good idea if you have the extra cash to allocate another way. You have to actually allocate it though or the loan is expensive.

[F82speed]

Originally Posted by chiplee

Think of the balloon as your last payment. It's due at the end of the loan regardless of vehicle value. Most people will sell, trade, or refi by then though. The only downside to this product is that interest is paid on the entire loan amount. Principle is based on loan amount less residual, hence the reduced payment. If you compare this loan to a 60mo 2% traditional loan I contend the numbers are in favor of the payment saver loan. You will save/keep a little less than the amount of the balloon over the next 60 months. You should have no trouble earning enough interest on that money to cover the full interest of the loan and the difference on the balloon, and that's being conservative. This loan is a bad idea if it's the only way you can afford the car, but a good idea if you have the extra cash to allocate another way. You have to actually allocate it though or the loan is expensive.

Yep, I understand all of that (and agree with your thoughts on the same) but I'm wondering what is the specific ramification of the residual amount not being guaranteed, if any? Understanding the principal (actual amortized portion of the loan amount) is the diff between the total and the residual, how can the residual not be guaranteed, or what difference does it make that it's not, I guess is what I'm asking. It's used to calculate the principal amount up front, but what does it matter after? The car is paid off and you own it free and clear if/when you pay the balloon right, so what's the potential impact, simply that your balloon payment could end up being higher than actual market worth (i.e. true residual) at that time (end of loan)?

Unless the balloon payment were to "float" and be determined by the residual to be calculated at the time it's due (which I know it's not) then I don't see what it matters that the residual isn't "guaranteed" other than the possibility that the free market may say the car isn't worth the same as the balloon amount come that time. Am I missing anything?

[chiplee]

Originally Posted by F82speed

Yep, I understand all of that (and agree with your thoughts on the same) but I'm wondering what is the specific ramification of the residual amount not being guaranteed, if any? Understanding the principal (actual amortized portion of the loan amount) is the diff between the total and the residual, how can the residual not be guaranteed, or what difference does it make that it's not, I guess is what I'm asking. It's used to calculate the principal amount up front, but what does it matter after? The car is paid off and you own it free and clear if/when you pay the balloon right, so what's the potential impact, simply that your balloon payment could end up being higher than actual market worth (i.e. true residual) at that time (end of loan)?

Unless the balloon payment were to "float" and be determined by the residual to be calculated at the time it's due (which I know it's not) then I don't see what it matters that the residual isn't "guaranteed" other than the possibility that the free market may say the car isn't worth the same as the balloon amount come that time. Am I missing anything?

Oh, I took that to mean that Penfed is telling you they have nothing to do with actual residual value at the end of the loan. On a lease you're turning in the car at the end of the term and the risk of incorrect residual is on the dealer/BMWFS. At Penfed, with this product, that risk is on you.

[F82speed]

Originally Posted by chiplee

Oh, I took that to mean that Penfed is telling you they have nothing to do with actual residual value at the end of the loan. On a lease you're turning in the car at the end of the term and the risk of incorrect residual is on the dealer/BMWFS. At Penfed, with this product, that risk is on you.

Yep, exactly, so the actual risk is just the obvious then. Simply that the car may be worth less on the open market than the amount owed as the balloon payment at that time, correct? You own the car outright if you make the balloon payment and you can't turn it in (as you could on a lease), so I assume that's it.

[Vectors2final]

That's definitely possible, but I don't see it happening unless you paid too much for the car.

I got a decent discount, and I put down some money. I also put down money because I plan on keeping the car, but I feel pretty confident that if for some reason I need to sell the car, I would be in an equitable position.

[F82speed]

Originally Posted by Vectors2final

That's definitely possible, but I don't see it happening unless you paid too much for the car.

I got a decent discount, and I put down some money. I also put down money because I plan on keeping the car, but I feel pretty confident that if for some reason I need to sell the car, I would be in an equitable position.

Yep, I'm with you, completely agree. Any actual risk is negligible at worst.

I think this is a great product. Offers most of the benefits of a lease while providing the benefits of purchase as well and certainly allows for better use of deployable cash, as chiplee pointed out The only possible downside in my eyes is if someone ended up refi'ing the balloon and paying more to own in the long run than necessary, but even then, situations change, life happens, whatever.

I'm locked in with BMWFS for the build (and have another local financing approval in hand) but will probably go with this when I finalize the deal next month upon delivery. (I'm going to apply this week but don't expect there'll be any problem.)

[GrussGott]

Originally Posted by F82speed

Yep, I'm with you, completely agree. Any actual risk is negligible at worst.

Just keep in mind guys that any type of financial shock would turn that risk into highly probable ... I'm a Risk-Adverse Ralph so I couldn't help sayin

[chiplee]

Originally Posted by GrussGott

Just keep in mind guys that any type of financial shock would turn that risk into highly probable ... I'm a Risk-Adverse Ralph so I couldn't help sayin

All the more reason to have the money on hand to pile into some 3x short ETF and come out ahead.

[GrussGott]

Originally Posted by chiplee

All the more reason to have the money on hand to pile into some 3x short ETF and come out ahead.

Totally agree - cash is king ... but, if you're in stocks right now, you're either an insane thrill seeker or believe in the "new economy" of the late 90s:

[Vectors2final]

Originally Posted by F82speed

Yep, I'm with you, completely agree. Any actual risk is negligible at worst.

I think this is a great product. Offers most of the benefits of a lease while providing the benefits of purchase as well and certainly allows for better use of deployable cash, as chiplee pointed out The only possible downside in my eyes is if someone ended up refi'ing the balloon and paying more to own in the long run than necessary, but even then, situations change, life happens, whatever.

I'm locked in with BMWFS for the build (and have another local financing approval in hand) but will probably go with this when I finalize the deal next month upon delivery. (I'm going to apply this week but don't expect there'll be any problem.)

Yup, I'd rather keep the cash on hand and wait to decide. I don't know how I would feel about this if I couldn't come up with the balloon, but that doesn't seem to be a problem for me at this point. Given the way these cars. historically hold value, I don't see an issue. It's all moot anyway because I definitely plan on keeping this car beyond any unforeseeable circumstances.

Originally Posted by GrussGott

Just keep in mind guys that any type of financial shock would turn that risk into highly probable ... I'm a Risk-Adverse Ralph so I couldn't help sayin

Cash is king... And soon I'll be in a new house mortgage free.