How to Take the Sting Out of Purchasing A Vehicle

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The Decision To Make A Purchase


After facing our only running vehicle break down a couple of times in the last four months and even coming up with a plan to minimize cost when it occurred, I was not amenable to looking for a second running vehicle unless the conditions were right. We had gladly returned our leased Toyota Sienna several years ago because within a couple of days of possession, the service department in Santa Monica faulted us for not being able to close the passenger-side sliding door completely and we lived with this problem for the entire time of the lease. So, when I received an advertisement from Pentagon Federal Credit Union that it is offering a 0.49 % auto loan if a vehicle was purchased through its buying program or a 0% auto loan if it is purchased through Enterprise, I decided to check it with no expectation.

PenFed’s Low Interest Rate Auto Loans


Actually Pen Fed is offering a third interest rate of 1.49% for any auto purchase and refinance. With the current economy, even a 1.49% auto loan is not as desirable when .49% and 0% loans are available, especially when I was willing to check the stock of vehicles available. Historically Pen Fed has offered very member-friendly services such as cost-free mortgage loans and a credit card with a 5% cashback on gas. (By the way, you do not have to be a Pentagon employee or even a Federal employee to join this credit union. You just have to join one of its non-profit association for approximately $25 and throw $5 in a savings account.)

To secure the .49% interest rate, I had to research my vehicle through the Pen Fed Buying Program. Practically every vehicle was listed with a free carfax report which gave the potential buyer some assurances that the vehicle was not in a wreck or suffered damages from flooding. As I later learned, the used vehicles were not cheaper through this program because I found the same vehicle at the same price at CarGurus.com, but the benefit was the low interest rate on the auto loan and some pretty good warranties and services. Also, I was given a Personal Auto Consultant who was helpful in that he secured the car at the price that we had seen the day before. The vehicle went up by $580 the next day.

It was further complicated when we learned that the Buyer’s Protection Certificate should have had a code that enable me to apply for the auto loan online and thus guaranteed me the .49% interest. Unbeknownst to me, my certificate lacked the code.

Without it, I had no choice but to have a customer service representative complete my loan over the phone, but within the same conversation, I learned that my loan was approved. But it was going to take some babysitting to make sure that all goes through correctly and that I receive the .49% loan rather than the generic 1.49% loan because I couldn't fulfill my end of the bargain, completing an online loan application. I learned that if everything goes as plan, I was going to pay less than $92 in finances for this loan. Who can beat that?

AutoNation Buying Experience


AutoNation owns quite a number of dealerships across the country. Apparently its business model was to offer fair prices on its vehicles. I discussed the price of the vehicle with a very knowledgeable Pen Fed customer representative who gave us information leading us to believe that it was a fair price. Although I knew that used car prices could be negotiable, it was true that it was not needed in this instance. We weren’t going to steal a car from anyone, and all we could hope for was a fair price.

The nice thing about AutoNation is that after scanning my auto insurance card and driver’s license, my paperwork was nearly done by the time we visited the showroom to test drive the vehicle at Power Toyota of Buena Park, which is owned by AutoNation. My contact asked me to look for a David Blumenthal, the internet specialist and third in rank at the dealership.

It was no longer than 5 minutes after hearing his name paged, a friendly looking salesman in khaki pants and black polo shirt came out to greet us, and within another 5 minutes, we were on our way for a test drive. This was truly astonishing considering that the showroom was pretty busy.

I took more time filling out the “credit application,” even though everybody there knew that I was pre-approved for a .49% auto loan. However, as I found out, that regardless of a pre-approved loan, this had dual purpose. First, in any large transaction, you need to provide them with the proper information that you fill out yourself, and then they take the information to complete the Purchase contract. We all know that information on a driver’s license can be stale. There was also a Patriot Act component to collect data and a preventative measure against terrorism. How did I know? I read it on the paperwork, and coming from a US Department that prevents terrorism, I know you cannot get around regulatory requirement; it would be comparable to not paying taxes to IRS and not completing a tax exemption form. Further, I didn’t have to dig for personal information such as bank accounts, etc. I was nowhere equipped for this.

If you are curious whether, the dealership ran my credit. The answer was yes because I had nothing in my hand to show that I had a pre-approved loan. I was promised an email but without proof, a credit check is a means to protect the dealership. It didn’t hurt that I learned that my credit was actually 26 points higher than I had last checked through American Express the week before.

David was very patient with me. He quipped, ”The hardest decision you’ll make today is which highlighter you want to use.” As a lawyer, I read most of the documents that he put before me to sign, but he also helped speed the process along by summarizing the purpose of each document and marking in an orange highlighter all of the places that I had to sign. For someone who signs for a living, it was routine.

Through the process, I learned that AutoNation followed California regulation by offering a free 3-day cancellation in case something went horribly wrong. Routinely, he showed us what other services the dealership offered, but we were not pressured to buy anything. He was even educational throughout the process. I learned that it's not ideal to spend more than 15% of your monthly income on a vehicle. Also, I ended up cancelling a $349 GAP insurance policy that I had agreed to include with my Pen Fed loan because David told me that in my situation, it was a bad investment. How many auto dealership personnel would have done that?

Before I knew it, I was looking at a clean white Ford Sports Trac that was ready to leave the lot. David handed us an “AutoNation Worry Free” folder that held the buyer’s warranties (60days on parts and services relating to the functionality of the vehicle), the carfax report, and an invoice. He even told me that the service department repaired or replaced a few items such as the turning signal stalk and also gave us ½ a tank of gas. We surprisingly took home a vehicle with merely an option contract. Thanks to David, AutoNation Direct, and Pen Fed, I am now able to take the kids and their bikes to the park, an activity I couldn’t do in my other vehicle. The entire experience exceeded my expectation.

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Comments 8 comments

tirelesstraveler profile image

tirelesstraveler 4 years ago from California

Buying cars annoys me more than I can express. I am delighted to hear about the .49 interest rate. Excellent review of Pen Fed and Auto Nation.


formosangirl profile image

formosangirl 4 years ago from Los Angeles Author

Tirelesstraveler, I feel the same way about buying cars, and that's why I had to share. In 2005, we spent 4 hours at Toyota Hollywood and walked out without a lease and was totally demoralized. It also ruined my July 4th weekend. Thanks for your feedback!


teaches12345 profile image

teaches12345 4 years ago

This is a great share and I love the way you blended your experience into the content. I will keep this logged for the time I need to purchase that next car.


formosangirl profile image

formosangirl 4 years ago from Los Angeles Author

Hi Teaches12345, from time to time, there will be car manufacturers who will offer 0% interest. However, if that's not the case, why not find a lending institution that will offer you a good rate and walk into a dealership equipped to reduce your headache. You can even bargain with your pre-approved loan. Unfortunately this time the dealership couldn't offer an even better rate. The contingency rate if we had not handed in our auto loan check yesterday would have have been 4.99%. A huge difference of more than $900 in financing.


rajan jolly profile image

rajan jolly 4 years ago from From Mumbai, presently in Jalandhar,INDIA.

Very interesting read. Good that everything went off so smoothly and you got a great deal.

Up and interesting.


formosangirl profile image

formosangirl 4 years ago from Los Angeles Author

Thanks Rajan Jolly. I was surprised that a positive experience was even possible.


nettraveller profile image

nettraveller 4 years ago from USA

This is good to know. Do you know if hybrid cars are also available under this plan?


formosangirl profile image

formosangirl 4 years ago from Los Angeles Author

The 1.5% auto loan is for a car from any lot, so the answer would be yes.

Check out the penfed.org website for more details. Today, maybe the last day for 0% from Enterprise. I would check to see if there are any hybrids there.

I heard that the buying program is great for a hassle-free discounted buy for new cars that can save you over $3000. However, I am not sure when the 0.5% ends or the 1.5% anywhere ends. I would call the customer representative number which is available 24/7. I missed the one in June which was why I jumped at this one, and didn't realize that the interest rate was going to be lower for me this time around.

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