noshow_nogo

I have an amazing opportunity to own an M5 for an amazing price.

When I go to a bank to ask for an auto loan, do they cut me a check for the amount I'd like to finance? Anyone in the loaning business?

My plans were to finance a greater amount than the actual sale price of the vehicle, let's say 40k is what I pay for the car, but I'd like to finance 50k. The reason for this is so that I can use the residual 10K to make the payments on the vehicle. My plans are to own the vehicle for a year and then flip it to break even or make a profit upon reselling and paying off the loan. If I've crunched the numbers right, I can drive an M5 for free, just paying for insurance and gas and possibly make some money in the end to pay for all the gas and insurance spent to own the vehicle.

cliffs:
(1) I can get an amazing car for 40k, which is valued at its current mileage to be 55-60 easily
(2) If I finance 50k from a bank, will they cut me a check for 50k and let me do what I want with it?
(3) Chance to own a M5 and also boost my credit history.

levon1830

You would probably have to get a loan amortized over 36 months in order to stay ahead of the depreciation of the car. 36 months @ 7% on a $50k loan = $1,543.85/month = $18,526.20 per year in car payments. $10,000 over purchase price hidden in car loan - $18,526.20 = $8,526.20 in the negative after one year of "free" ownership. So no, you won't make a profit or break even over 1 year of ownership.

Not to mention I don't even know if that is legal. If it is, I hope you trust whomever you're buying the car from to write them a check in good faith for $10,000 above the asking price. If your seller is shady, kiss you money goodbye and buy a nice, soft pillow to sit on for a while because your ass will be sore from the supreme raping.

Keep in mind a personal check from them made out to you at the time of the deal offers you no reassurance that you will get the $10k promised to you. If it's legal the best way would be to have the seller come to your bank, cash the check with you standing there, and hand cash money to you on the spot. But even that scenario has its potential issues.

I say just:

a). Buy the car for the true asking price and enjoy it.
b). Move on and the forget the whole idea.

CorvettePoor

That is real close to the dumbest thing I ever heard.....I will bet that you will never come out ahead on this deal

JJ4Short

If anything he can have his friends steal it and get the insurance money

phil2

Being in the mortgage business for 9yrs now....THIS IS BANK FRAUD!

JaredGMS

Why would that be? He's giving the bank a lien on the car, and the lien is fully secured to the value of the car.

How is it any different than taking $$ from the loan to pay for taxes/fees?

Moog-Type-S

The OP is a genius!

JJ4Short

I dont think this is illegal but I doubt it will go towards his loan. $10 grand sitting in the bank is mighty tempting. Something major comes up, and BOOM its partially gone.

leftride

iTrader: (1)

legal or not, I would think you would be hard pressed to even find a bank that was willing to do that. Even if you say it's worth more/as much as the loan you are trying to get, it's still a depreciating asset.

plus i dont think getting upside down on a weird ass loan is going to boost your credit history, it will send it down the toilet.

BC2G

first of all, banks and loaning institutions do not finance private party car sales,

therefore you would have to get a private loan for $50,000, based on what you say "chance to build credit" and you're 24 odds are NO BANK IN THE WORLD WILL FINANCE YOUR SORRY ASS....

nice try though, my suggestion, buy a $2000 civic, or try and get a loan for $2000 which you will no doubt be rejected for assuming you have no credit history.....

however, if you have a rich relative willing to put 50,000 in a secured low interest savings account to back the amount of the loan then MAYBE a bank will approve you.

you're clearly confused, a good place to build credit is like a best buy or wal mart credit card, not a $50,000 loan

BC2G

by the way, figures you're from jersey

leftride

iTrader: (1)

um...then how do you think people buy used cars?

Eggplant-EX

I believe that the Bank will cut a check to the Seller in the amount of the sales price. They are not as dumb as they look...

I cannot talk about Banks, but I know USAA has a Loan service if you buy used.

BEETROOT

Like Eggplant said, the bank cuts a check to the seller. The bank is really the one buying the car... I'm pretty sure you don't ever actually have 'possession' of the cash. Been a while since I financed a private party sale though, I could be wrong.

So I'm fairly certain they won't give you a loan for more than the price of the vehicle.

JJ4Short

BTW I worked for a credit union, we never cut checks personally even when we would give insurance checks. We would always make it solely to the business you are paying.

Eggplant-EX

yup! The Bank will not cut a check to an individual and trust that he will buy the car. They will cut the check to the seller and hold the title.

I do know that you can take the title of a car and refi on it. But there are conditions like certain age. You cannot take too old of a car in and borrow on it.

my 2 cents.

JaredGMS

Look in the mirror for the confused party here.

Hell, banks will loan you money on your own car for a lien on it.

timmahh

Have you thought about the insurance cost on an M5 for yourself..

DarkSithCL

iTrader: (1)

....cars are holes on 4 wheels... pretty much... unless someone gives you one... plus an M5 will cost a GRIP to fix if anything goes wrong... skip the used 40K ride at 24 and get something that will be more reasonable... buy a 240k house with a garage then a 40k car... and wait until you don't have to BORROW money to make the payments... thats bad mojo bro...

JaredGMS

These are the kind of people that come to see me for a consultation....

DarkSithCL

iTrader: (1)

I am so sure...most times they have probaly already signed the papers by the time they get to you...

guidance... thats what we are here for... ...problem is most folks will not listen!

Costco

wtf? I don't get what the OP is trying to do.... even if he loaned an extra 10 grand for payments, if he made payments with that, wouldn't it just be like loaning 40k? And even still, wouldn't he be paying quite a bit of interest on it, meaning he's spending more than he needs to in the end?

to the OP, you shouldn't be borrowing money you don't have.... if a 19-year old is pointing this out to you, you're in trouble.

You have good taste though. E39 M5s are probably my most favorite sedans ever.

While your posts weren't entirely accurate they made me

Costco

nm, I read the op again and I got even more confused but I see what he's getting at

I was actually thinking the same thing with my car. I got it for a steal, though I didn't finance any more than the selling price. I actually financed less because I had a cash down payment direct to the seller included in the terms.

What I was planning to do was sell my car for more than I bought it for and get an SS... but figured it wasn't worth it.

I'm still confused though. Assuming this is legal, and the seller gives him his $10000 back, why is this a bad idea?

noshow_nogo

LOL. the only thing I questioned was the legality and administrative process of it, but I'm loving the extra flames on top of it.

BC2G - "first of all, banks and loaning institutions do not finance private party car sales,

therefore you would have to get a private loan for $50,000, based on what you say "chance to build credit" and you're 24 odds are NO BANK IN THE WORLD WILL FINANCE YOUR SORRY ASS...." "by the way, figures you're from jersey"

comments like that don't get you much of anywhere. it's like me saying "figures you're from socal. how are you enjoying mommy and daddy's money to pay for your TL and your insurance?" and I know for a fact banks will lend and fund private party sales. I didn't want to jeopardize myself by asking someone at the actual lending agency. go on with "YOUR SORRY ASS...."

once I was made clear of the administrative process, it kind of shoots my plan down. Thanks for the informative replies, to the others, it's sad you waste time to even reply to a post that you deem stupid. I, myself, would just move on and save 10 seconds of my life.

oh yea I'm 24 and my credit score as of April 2008 is 813. not many of you can say the same. /thread

noshow_nogo

just to add to other questions in the thread.

::::I've already been approved for a $50k loan @4.75% @Wachovia and another at 6% at Citi. I can sign papers at any time, it's open-ended.
::::I see this as more of an investment opportunity because the depreciation on the car over a year's time and a few thousand miles don't affect this particular vehicle as drastically as other cars. I can breakeven even with the interest on the financing loan, or make a few bucks in the end.
::::Insurance for the TL and M5 as a weekend come up to 400/month. a mere 150 more a month than I'm paying now

ok now /thread

ProvidenceLeaf

First of all...What year M5 are you getting for $40K?

If you are talking about the newer body style (e60) then I find it hard to believe that someone is going to sell it to you for $40K. The lowest priced M5 I could find was $50K anywhere in the country.

JJ4Short

How much down do you have? Or what is your job? I have a 4% loan on my car I got 4 years ago and last I checked almost no one does that anymore. Most places will do only 6% unless you have super awesome super man credit.

What's your financial situation? Own a home? I am sure if people knew they might not give you such a hard time.

TzarChasm

I'm wondering if the car is somehow damaged and the OP just dosn't know it yet. It could be that this thing is a salvage title or something. "if a deal sounds too good to be true....."

Crazy Bimmer

DO IT!!!!!!!11!!!1!one!!!1

cltypeSLOW

lol, the bank is not like walmart dude....they dont give you a CASH BACK option on purchases. LOL

mrdeeno

My suggestion to the OP is if he is already approved, then go for it.

He'll end up losing his ass in the end because the situation is most probably a lot more complex than he makes it sound or there is something that he doesn't know which is why the seller is selling an M5 for so much below market value (salvaged with "washed" title? hidden/covered up damage? anything bought from a private seller is "as-is", so even if seller doesn't know about any problems, which he probably does because he's selling it for so cheap, you have no recourse).

Either way, if he doesn't go ahead with it, figuring the logic this guy has going through his head, he'll lose his ass on something else, so why not just lose his ass on this and drive an M5 for awhile?

fuzzy02CLS

iTrader: (2)

Even if things worked like the OP thinks, the chances of dumping the M5 in a year for anywhere near what is owned on the loan is a big fat ZERO.
Cars are not investments. You want to do this, do it with a house.

SakiGT

0. You ask for a certain amount, the bank will finance what they want to give you.
1. The only way to get cash back is to get it from the seller.
2. You will have to pay taxes on the full amount
3. You dont need to buy a 50k car to build credit.
4. Dont do it.
9. Dont do it
471. Dont do it.

noshow_nogo

it's a 2006 with 18k on the clock. hard to believe i know, I didnt believe it til I test drove it. The guy selling it used to do very well in teh real estate market. My boy is buying his 06 quattroporte for 50k with 26k on the clock.

The guy basically doesn't care about money, just wants to reduce his expenses and start over. He can always make a few million more later, now he wants to be more liquid. and to all the other posts. read my reply, I already know the deal won't work out. stop beating my dead horse lol

noshow_nogo

LOL awesome. 471, so random

but yea, the seller is a business partner of my friend's, so he has only good intentions, bc if he screws me or him, there go his commercial development projects and contacts

TzarChasm

Well, if he can really get an $100K car for $40K then he should be able to make money on it selling it no matter how long he drives it.

OP- If this is for real, just get a loan for the $40K and put it up for sale for $50K the same day, you should have no problem selling it within a month or two for $50-60K when they seem to be going for $80K used on autotrader. My question is still weather or not this is legit, because I have some serious doubts about anyone wanting to sell a car for half of book value. My guess is still a washed title.

Actually, you could sell it to a used car dealer on the day you buy it. They have tons of places around here that will give you cash for your car, and any dealer would give you more than $40K for an M5 with 18K miles. Or maybe you could offer to sell the car for the guy and you get to keep half of whatever is left over after $40K. But again, why isn't he doing this himself?

BEETROOT

teh real estate market stinks

everyone cares about money

carguyrob

You can get a loan for a private party car purchase...but, they generally require that you put 20% down out of your own pocket (because it is used and private party). That down payment is based on what they consider the car's value to be based on blue book. If they considered wholesale value to be $60k, that means $12K down out-of-pocket.

And if your FICO score is 813, it will go down, not up with a $50K car loan. FICO scores range from 350 to 850...it is very tough to keep a score at or above 800. A few credit inquires or new lines of credit can make it drop 10-20 points. Total amount of debt that you have is one of the factors used to figure out your FICO score.

Gilgamesh

Deals like this are why I had trouble getting a loan on my house and why I can't get a job now.

Stupid asshole banks loaning a $3500/mo mortgage to people who gross $3000/mo.

Do it. Just don't come crying when you have a 30 credit score at the end.

ProvidenceLeaf

This is not really directed toward you, but the car is not $100K even brand new. The year and mileage he is talking about averages around $60K.

So my next point to noshow_nogo would be if even if you could pull the $50K only having to give $40K you would be crazy. Just think they are averaging $60K today. What will the value be on the car a year after you drive it and put some more miles on it? What if you ever got into an accident with it. It could drop a ton. Anything can happen in a year.

Also, the new body style is due out at some point next year which would drop the value of the car even more.

Don't do it...don't be foolish.