[SoCalJon]

Background: Not my first new car. Not my financed new car. But it is my first non-dealer financed first car, and my first California new car. It's also my first post-pandemic/supply-shortage/special-order car.

We're pre-approved with our credit union. We live 45 minutes from the dealership, which means we want to limit trips back and forth.

I'm just not clear on the logistics of 3rd party financing as it relates to paperwork, money, and actually taking delivery of the car. Since there's a 3-percentage point difference between my credit union and BMW finance, I want to be certain not to mess it up.

The credit union won't release funds until they have a signed purchase agreement. I assume that's pretty normal. I also assume that I really ought to see/inspect the car before putting money on it and signing the purchase agreement.

The dealer says I have two options: come down and do all the paperwork, leave the car on site, and then come pick to it up after they've received payment from the lender. Or come down, do an "option financing" (or something like that) with BMW Finance, take the car, and as long as the credit union check arrives within 3 days, the option finance contract is canceled.

Is that second option normally how people do this? Is there any risk of things going sideways?

(Prior negative experience with F&I guys causes me to be skeptical of the purchase process, and I want to make sure I'm not being taken for a ride.)

[davidh676]

The way it worked for me was the dealer emailed me a signed purchase agreement (they signed, not me) showing the amount down and the amount outstanding. My credit union gave me a check and stapled the lien-holder info to it for the title and that was it. Brought that to the dealer (no back and forth).

[SoCalJon]

Originally Posted by davidh676

The way it worked for me was the dealer emailed me a signed purchase agreement (they signed, not me) showing the amount down and the amount outstanding. My credit union gave me a check and stapled the lien-holder info to it for the title and that was it. Brought that to the dealer (no back and forth).

Did you put money down prior to seeing the vehicle?

In my case, I still have no money out of pocket yet. (No deposit, earnest money, or down-payment was collected when I ordered. I do have excellent credit, and they pre-approved me with BMW Finance as part of the ordering process.)

[kbmwjo22]

I'm kind of in the same boat, sorry OP, I don't mean to hijack your thread... First time financing here, and planning on going thru third-party credit union. And I'd be doing a trade-in too...

My car will likely be on the dealership lot in about 2 weeks, and I live three freaking hours away from the dealership-ugh.

I guess I'll have to get in touch with my credit union this week in order to let them know, but definitely want to make sure I have all my ducks in a row with them before I head out there.

[davidh676]

Originally Posted by SoCalJon

Did you put money down prior to seeing the vehicle?

In my case, I still have no money out of pocket yet. (No deposit, earnest money, or down-payment was collected when I ordered. I do have excellent credit, and they pre-approved me with BMW Finance as part of the ordering process.)

A refundable deposit but no, the purchase order was written up showing the amount I was putting down. I ordered the car so the price negotiation was all wrapped up before it arrived.

Credit Unions are pretty experienced with this type of thing so I'd follow their lead.

[SoCalJon]

Originally Posted by kbmwjo22

I'm kind of in the same boat, sorry OP, I don't mean to hijack your thread... First time financing here, and planning on going thru third-party credit union. And I'd be doing a trade-in too...

My car will likely be on the dealership lot in about 2 weeks, and I live three freaking hours away from the dealership-ugh.

I guess I'll have to get in touch with my credit union this week in order to let them know, but definitely want to make sure I have all my ducks in a row with them before I head out there.

No worries at all. Not a hijack... just a piggy-back. I'm only 45 minutes away, and make the trip that way at least once or twice a week. I just hate to waste time.

[Bc2005]

Both dealers and credit union should be very familiar with this type of deal, since it’s very common. However, if this is a new car are you sure you are not missing out on any incentives by not taking BMW financing? If there is a good incentive you can always take the BMW loan and then refinance it later.

In the past I’ve filled out a credit application with the dealer so they could ensure I would be approved for their loan as a backup. The dealer sent me a purchase order that I provided to the credit union, and the credit union then gave me a check and all the title lien info. I took the check and lien info to the dealer and picked up the car. In one case they were willing to let me have the car right away and just wait for the credit union to mail them the check.

The dealer and salesman have a very strong motivation to get you to drive away with the car that day, because that mentally locks you into the sale. If they let you drive home and you plan to see the credit union tomorrow, you might get cold feet and not come back.

The car is not yours until the title paperwork goes through, and the dealer will not submit it until the credit union check clears. I’d that fails they can always run it through BMW credit and give you that loan.

[SoCalJon]

Originally Posted by Bc2005

Both dealers and credit union should be very familiar with this type of deal, since it’s very common. However, if this is a new car are you sure you are not missing out on any incentives by not taking BMW financing? If there is a good incentive you can always take the BMW loan and then refinance it later.

Great question...

There was no incentive offered for taking BMW financing. I suppose that could still materialize. As of 2 months ago, the offer from BMWFin was 5.29% over 60 months. My credit union (locked in rate until Dec 5) approved 2.74% over 72-months. BMW would have to extend the loan to 72 months and discount the price of the car by about $2,500 in order for me to finance in-house.

Additionally, the current interest rate environment means that refinancing is not a great option, because if I miss that Dec 5 deadline, I'd have to re-apply with the new rates. I'm pretty loathe to lose that 2.74%.

[tifa3]

In the same boat as well - I'm already approved by my CU - I will do an inspection of the car first when it arrives and then land on signing bill of sale and putting down deposit amount if everything looks good. I'll then ask about the outside financing - if they allow it, then I'll send bill of sale to my CU and get the check - pick up the check same day and then drive my car home. If there's any issues with not allowing my CU, then I'll take BMWFS and refinance next day.

[MasterOfNone]

Crazy. When I do outside financing, I show them the information and the dealership does all the background and I drive away.

Show up and show them the info via phone they write it down etc, and I drive away.

[SLO-Flat4]

Our credit union issued an auto convenience check that we took and filled out and signed at the dealership. I had already sold my trade in, so the amount was simply the out the door price minus our down payment.

[SoCalJon]

I just wanted to update my own thread with an answer to my question. When I started this thread, I didn't really know the name of what I was doing -- it's called an "Option Contract" or a "Courtesy Contract." Essentially, it lets you drive the car off the lot having signed for dealer financing as a "backup" that doesn't kick in for a few days, allowing you to get the rest of the money to the dealership.

This was the thing that made me most nervous, as I had a great pre-approved rate from my credit union, and didn't want to lose it.

As a reminder, I was told by all of the dealers that I worked with (3, on this particular transaction, because my first CA got promoted), that we could sign an option contract for a loan with BMW, which would allow us to drive off the lot with the car, even though the Credit Union check wasn't there. As an additional reminder, my Credit Union wouldn't write/send a check without a signed purchase agreement, and the dealership wouldn't execute a purchase agreement without the vehicle onsite for me to inspect.

The contract that I signed was incredibly clear, and removed most of my concerns right away. In the "Your Payment Schedule" section, it said "One Payment of $30,000 due 11/19/2022 (Saturday), OR 59 monthly payments of $579.84, beginning 12/14/2022."

Elsewhere in the contract was an "Option" box that said "You pay no finance charge if the amount financed, item 7, is paid in full on or before November 19, 2022." The seller has to initial that line.

Anyway... it worked like this:
1) We signed the paperwork.
2) He securely emailed us the paperwork.
3) We uploaded it to the Credit Union
4) We got our keys and registration/temp plates
5) We went home
6) The next day we docusigned the loan with the credit union.
7) They FedExed the check overnight (at my cost) to the dealership.
8) The Credit union supplied me with a copy of the check and the FedEx tracking numbers
9) I got a text from FedEx when it was delivered.
10) I emailed the finance guy a few hours later to confirm that the check was received an everything was in order.

I'm putting all this out here because I didn't really understand it when I started. I confess I was pretty skeptical, and this was what kept me up at night... working out all sorts of contingency plans if it went sideways.

There isn't a lot of information on Option/Courtesy contracts on the internet. Maybe they aren't all that common. If my experience helps someone sleep better down the road, it will have been worth typing this all out!

[Bc2005]

That’s great that it all worked out as planned!

Not for the OP, but just my opinion - Despite the current crazy car market, I assume it’s still true that the dealer is even more motivated to sell than you are to buy that special BMW you picked out. That means they always want to lock you into the deal soon as possible, and you can push them to be flexible. You can also use that to your advantage if they start to make things difficult with financing or other details, because you can choose to delay (I need to talk to my spouse, etc.) or to just walk away. You may feel bad about giving up that special car you wanted, but it’s your choice to make. Don't let them manipulate you just because you really like the car.