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      03-25-2015, 11:33 AM   #1
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PenFed Refinance

Hello all -

My gf is looking to refinance her 2011 328i that she bought 2 years ago. She's currently financed with BMW, but paying 7% interest rate. I had read that some of you had good experience with PenFed in the past.

Does anyone know what credit agency PenFed uses to pull credit history?
What type of score is needed for the 2-3% interest rates?

Thank you in advance.
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      03-25-2015, 01:34 PM   #2
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Well...

The credit profile for the lowest interest rate (2-3 %) with PenFed, or most banks, follows...

Credit Score: The auto-enhanced credit score is different than the regular FAKO or FICO credit score. Auto-enhanced credit score depends on the car payments, length of car loan, how many car loans, etc. In any event, a score of 730-760 and above (depending on the bank) with minimum 3-5 years of credit will get you the lowest rates. 800+ credit score take many, many years to achieve.

Utilization: No more than 10-30% total combined on ALL credit cards for the best score.

Length of Credit: This is the most common negative factor. Even people with 5 years of credit can sometimes be labelled with "new to credit" or "insufficient credit history". Try and have at least 5+ years of positive credit history to improve the odds of desired approval.

Average Age of Account: This depends on the age of your open credit card accounts. More mature accounts with on-time, above minimum payments and low utilization are favored.

Credit Reports: Try to have little to no late payments. Recent late payments will definitely have a negative effect on the approval APR (if approved).

Derogatory Marks: Anything in collections will have a huge negative effect on your credit. Try to pay off and request these to be removed by agencies.


Bottom line: Try to refinance if your credit score is 730 or above for the lowest APR. If you have that score you're doing something good!

BTW: I'm not sure who PedFed uses.
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      03-26-2015, 05:18 PM   #3
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Quote:
Originally Posted by Mastr_Chief View Post
Hello all -

My gf is looking to refinance her 2011 328i that she bought 2 years ago. She's currently financed with BMW, but paying 7% interest rate. I had read that some of you had good experience with PenFed in the past.

Does anyone know what credit agency PenFed uses to pull credit history?
What type of score is needed for the 2-3% interest rates?

Thank you in advance.
My score is 680 and I filed jointly with my wife (1.5 yrs credit history as a foreigner) and got approved for their lowest rate advertised for used car refinance, which was 2.99% @ 60mo at the time (2 months ago). Hope this helps.
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      03-27-2015, 07:35 AM   #4
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Penfed is very easy to deal with. I went through the whole process but ended up with better financing through BMW. You need to open a checking account with them first. I think it's a $50 minimum if I remember.
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      03-27-2015, 12:36 PM   #5
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Thanks everyone. She went ahead and applied this morning and was able to 2.5% for 48 months. Much better than the 7% she was paying with BMW.
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      03-27-2015, 01:21 PM   #6
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wow 7%! just curious how much she paid in interest for the past 2 years...
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      03-27-2015, 05:54 PM   #7
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Quote:
Originally Posted by Mastr_Chief View Post
Hello all -

My gf is looking to refinance her 2011 328i that she bought 2 years ago. She's currently financed with BMW, but paying 7% interest rate. I had read that some of you had good experience with PenFed in the past.

Does anyone know what credit agency PenFed uses to pull credit history?
What type of score is needed for the 2-3% interest rates?

Thank you in advance.
As someone who've worked with hundreds (if not thousand) auto loans for half a decades. I can share with you some of the underwriting guidelines (obviously different lenders have different guidelines, but this should give you a good idea)

1) Lenders usually pull your FICO from all 3 bureaus (Experian, Equifax, Transunion), then they would pick the lowest score to go with. But when you ask them this question, they will give you a very politically correct reason

2) The lower the interest rate, the harder the requirement. They expect you to have GRADE A credit, so anything above 720 with no or little delinquency. They will want to see that you've paid off an installment-loan in your credit history. If you have grade A credit, chances are they won't request you to verify income. This is the gray area that can help you. If you're self-employed, chances are they will want to see your proof if income. If you claim to make ridiculously high income not within the reasonable paygrade of your profession, they may ask for proof of income. (for example, don't claim that you make $100,000 a year for being a cashier.)

3) Most lenders want you to have Debt-to-Income (DTI) ratio less than 45%. To calculate DTI, you add all of your monthly minimum payments (NEW LOAN PAYMENT, credit card, loans, mortgage, rent, and include any other liabilities that you're a co-signer of), then take that sum divide by your gross monthly income. Then multiply that by 100 to get your DTI percentage. You don't have to add phone bills, utility bills, and insurance bills.

4) Most lenders will also increase your rate a little if your LOAN-TO-VALUE (LTV) is too high. Basically it's the percentage of what you currently owe divided by the actual market value (so if your car have luxurious features, make sure they know about it to increase your car's value). Most lenders don't use Kelly's Blue book, N.A.D.A is more popular. And obviously a good way to lower LTV is by adding more cash.

5) Some lenders also increase your rate if your car is past certain age or mileage because they consider that higher risk.


hope that helps, feel free to pm me for specific questions.

Last edited by 888Concept; 03-27-2015 at 06:09 PM.
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      03-30-2015, 02:26 PM   #8
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Quote:
Originally Posted by 888Concept View Post
As someone who've worked with hundreds (if not thousand) auto loans for half a decades. I can share with you some of the underwriting guidelines (obviously different lenders have different guidelines, but this should give you a good idea)

1) Lenders usually pull your FICO from all 3 bureaus (Experian, Equifax, Transunion), then they would pick the lowest score to go with. But when you ask them this question, they will give you a very politically correct reason

2) The lower the interest rate, the harder the requirement. They expect you to have GRADE A credit, so anything above 720 with no or little delinquency. They will want to see that you've paid off an installment-loan in your credit history. If you have grade A credit, chances are they won't request you to verify income. This is the gray area that can help you. If you're self-employed, chances are they will want to see your proof if income. If you claim to make ridiculously high income not within the reasonable paygrade of your profession, they may ask for proof of income. (for example, don't claim that you make $100,000 a year for being a cashier.)

3) Most lenders want you to have Debt-to-Income (DTI) ratio less than 45%. To calculate DTI, you add all of your monthly minimum payments (NEW LOAN PAYMENT, credit card, loans, mortgage, rent, and include any other liabilities that you're a co-signer of), then take that sum divide by your gross monthly income. Then multiply that by 100 to get your DTI percentage. You don't have to add phone bills, utility bills, and insurance bills.

4) Most lenders will also increase your rate a little if your LOAN-TO-VALUE (LTV) is too high. Basically it's the percentage of what you currently owe divided by the actual market value (so if your car have luxurious features, make sure they know about it to increase your car's value). Most lenders don't use Kelly's Blue book, N.A.D.A is more popular. And obviously a good way to lower LTV is by adding more cash.

5) Some lenders also increase your rate if your car is past certain age or mileage because they consider that higher risk.


hope that helps, feel free to pm me for specific questions.
very great post! so how can we work around the system to get the best?
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      03-30-2015, 05:14 PM   #9
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If I could shed a little more light on auto lending, my institution offers the best interest rate at a DTI <76% and an LTV <90% for those with good/great credit. If the borrower has average/below average credit the DTI guideline will move towards the number that 888concept provided.
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      03-30-2015, 06:29 PM   #10
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Quote:
Originally Posted by monkeybingo View Post
very great post! so how can we work around the system to get the best?
Another thing I forgot to mention too is that low-interest-rate lenders (aka conservative lenders) also steer away from those who have high credit balance to revolving limit ratio.

Pm me a little information about your credit history. Also how much of your gross income is actual verifiable? How long have you been working for the current company and/or how long you've been working in the same industry.

With those information, I can help you strategize an effective plan.
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      03-31-2015, 11:09 AM   #11
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      05-01-2015, 03:27 PM   #12
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Some good stuff here. Thank you for this!
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