Carmax, question for Marv

[Mayor]

Hey Marv, do you know anything about Carmax financing? Are they hard to get approved for? Also, I've heard nothing but good things about them, so in your opinion would you go through them for a car or a dealership?

[MarvBear]

The company is owned by carmax therefore is considered a captive finance source.

 

I personally would never recommend one to purchase a vehicle from a CarMax store UNLESS it is a NEW VEHICLE. OTHERWISE you shall pay too much.

 

Their finance department performs below par.

 

I am not familiar with CarMax's lender idiosyncrasies.

[Mayor]

I always assumed they had before prices than dealerships, cause it seems like people say they have better prices for used vehicles and don't try to rip you off like dealerships do sometimes

[Mayor]

Also I forgot to ask -- E-Loan or Lendingtree..Are those sometimes better than dealership trying to get it financed. I know Lendingtree uses more than one loan company to try to get you approved.

[MarvBear]

I always assumed they had before prices than dealerships, cause it seems like people say they have better prices for used vehicles and don't try to rip you off like dealerships do sometimes 

<{POST_SNAPBACK}>

 

They as I understand the method of operation are basically hassle free. If I were in the market for a new vehicle I would definately buy from them, but would not allow them to touch the vehicle in the service department. I most certainly would not allow them to finance the vehicle for me.

 

Just goes to show you what advertising doew for one. Their average profit on used vehicles FAR FAR exceeds any others. So is basically just a perception IMO.

 

To this day, when I have a customer who has bought and financed a vehicle via CarMax I have never failed to remark about their upside down position being far farm worse than from any other.

 

This from years of observations nothing more.

 

Hassle free does not necessarily equate to a good deal financially in the long run.

[MarvBear]

Also I forgot to ask -- E-Loan or Lendingtree..Are those sometimes better than dealership trying to get it financed. I know Lendingtree uses more than one loan company to try to get you approved.

<{POST_SNAPBACK}>

 

 

Those are consumer sites, that I do not frequent. The applications you complete are not nearly so definitive as the data entry I complete nor are they as comprehensive or flexible in rating your creditworthiness.

 

Overall, it is my opinion, with judicious shopping you can definately get a better deal via the dealership. And probably less inquiries too boot.

[aksarben]

FWIW went on a brief SUV shopping trip the other day for an '01 Expedition. at 2 dealers. Except for color they were identical....

 

LEXUS Preowned: $17.9K w/52K miles

CarMax: $18K w/72K miles, and Lexus dealer's vehicle was in better condition.

 

Also checked CarMaxonline, a couple had 64K miles but were $19K.

 

BTW, never drove an Expy before....really disliked it. We're sticking w/Yukon or Tahoe.

[Glacier]

Hello. I worked at CarMax for 1 year a couple of years ago. I was in Sales. Some insite to how they did financing at that time (and I hear it is still the way), your Salesperson enters the credit app into the system. It gets printed out, and a Manager comes in and you sign it. The Credit App is then transmitted to the Lenders used by Carmax. When I was there these were the lenders:

 

Preferred/Standard Lenders:

CarMax Auto Finance (captive)

Bank of America

 

Sub-Standard Lenders:

Americredit

TransUnion

Wells Fargo

 

Occasionally, one of the SubStandards would make an offer on a Preferred Buyer to balance portfolio.

 

Once a decision is received, the Salesperson and the Manager come back into the office, and show all offers received, which show rates, terms, etc.

 

In my personal experience with CarMax, there was no F&I Guru like Marv in the building. What that meant, someone on the bubble to obtain financing, may not get it, as a Sales Manager had to convince the lender to lend the money. Also, without an F&I Guru, the loans can't be "bundled", ie, I will give you these 5 super loans, if you buy this one mediocre loan. Sometimes the Managers got the paper bought sometimes they did not.

 

For me as a consumer, I went to Carmax with not so good credit. They could not get me financed on a new or newer car. I went to Ford, and the F&I Manager was able to get me bought on a new Explorer Limited.

 

As for prices, some were good, some not so good. As with anything, I say shop around.

[MarvBear]

Hello.  I worked at CarMax for 1 year a couple of years ago.  I was in Sales.  Some insite to how they did financing at that time (and I hear it is still the way), your Salesperson enters the credit app into the system.  It gets printed out, and a Manager comes in and you sign it.  The Credit App is then transmitted to the Lenders used by Carmax.  When I was there these were the lenders:

 

Preferred/Standard Lenders:

CarMax Auto Finance (captive)

Bank of America

 

Sub-Standard Lenders:

Americredit

TransUnion  This is a CRA  NOT a lender.  Perhaps you meant TranSouth?

Wells Fargo

 

Occasionally, one of the SubStandards would make an offer on a Preferred Buyer to balance portfolio.

 

Once a decision is received, the Salesperson and the Manager come back into the office, and show all offers received, which show rates, terms, etc. 

 

In my personal experience with CarMax, there was no F&I Guru like Marv in the building.  What that meant, someone on the bubble to obtain financing, may not get it, as a Sales Manager had to convince the lender to lend the money.  Also, without an F&I Guru, the loans can't be "bundled", ie, I will give you these 5 super loans, if you buy this one mediocre loan.  Sometimes the Managers got the paper bought sometimes they did not. 

 

For me as a consumer, I went to Carmax with not so good credit.  They could not get me financed on a new or newer car.  I went to Ford, and the F&I Manager was able to get me bought on a new Explorer Limited. 

 

As for prices, some were good, some not so good.  As with anything, I say shop around.

<{POST_SNAPBACK}>

[Glacier]

You are Correct MarvBear... I did me TransSouth... my most humble appologies.

[wingnut]

Marv, I work for carmax and have to disagree with you about the financing they offer. Let me explain how the financing works at CarMax.

 

The sales consultant builds the credit app and submits it online. The app is computer scored. There are some exceptions but basically it goes like this, if you have a 650 beacon or higher then the app is sent to Bank of America and Carmax Auto Finance (or CAF as it's referred to). If you don't meet Bank of America's minimum requirements, then the app will goto CAF only. Now, if you get approvals from one or both of these lenders then you're done. These two lenders are considered primary lenders and offer very competitive rates (as low as 4.95 for 60 months). The rate does vary based on your credit, down payment, and age/mileage of the vehicle. The other nice thing about approvals through these lenders is no supporting documentation is required. You just have to show proof of existing insurance and a valid drivers license to buy the car.

 

If the applicant is not approved by a primary lender (and has a credit score of at least 520), then the application rolls to our secondary lenders. They are Transouth(now considering credit scores as low as 440), Wells Fargo, and Americredit. All of the secondary lenders require supporting documentation. All deals through them must have full coverage insurance added to the car BEFORE you take delivery of it. 3 personal references are also mandatory. In addition, they sometimes ask for other things such as proof of residence(utility bill) and proof of income.

 

If none of these lenders return approvals, then CarMax has recently added a subprime lender (Drive Financial) that will approve anyone with $1500 down, a current phone bill (POR), proof of income (at least $1500/month), and the vehicle must be under 5 years and less than 35k on miles. Finance amount can't be more than $12,500. The rate is a very respectable 17.95% for 60 months (most customers who get financed through them are being offered 22 or 23 somewhere else). Also, the price of the car doesn't go up at Carmax like it usually does at other dealers with "special finance".

 

Now, Marv, many people who come to a board like this asking about financing a car at Carmax don't know the difference between Carmax Auto Finance and a lender like say, Transouth, all they know is they financed it at Carmax (the dealer). So, you must consider all lenders they use, not just CAF. Carmax gives customers the chance to find a better rate AFTER THEY BUY the car, and if they find a better rate, we'll redo the financing with their lender w/ 0 PENALTY (within 3 business days). I've had many customers try this option, and I'd say 1 out of 10 that actually try to get a better rate, come back w/ something more than 1 point better than what they got through us.

 

Now, there are some shortcomings to the system. First, the sales managers at carmax are supposed to be the equivalent of F&I managers at other dealerships. Since everything else at carmax is no haggle, some of them either get lazy or thing that financing should be the same way (the dealer talking to the lenders I mean). Most locations have 6 or 7 sales managers, and usually 2 or 3 of them are unwilling (too lazy, too scared, or think the lenders know better than they do) to call the various lenders to try to negotiate lower rates, waiving funding stipulations, etc. As a sales person, I've learned which managers I can count on to analyze a deal and get rates moved, stips waived, term increased, down payment lowered, etc.

 

The other major shortcoming to the CarMax system is those applicants who are on the border between primary and secondary. Every once in awhile CAF will dig down and approve someone that I think should be a secondary customer. Usually they do so at a high rate (12-17%). This is usually someone with good job/residence stability and a decent down payment but little credit. Or maybe no down payment and a few minor blemishes on their credit report. The problem is that CAF approves someone like this at say, 15.95%. From experience, I know that the secondary lenders would probably approve this person at say 9.5 or 10.5%. Unfortunately, the secondary lenders never get to see it because they don't get their hands on apps unless CAF declines them. I personally think that's crap, and I won't allow it for my customers. There are some ways to structure the credit app so that CAF automatically declines it, and if I get into a situation like the one described above, I retransmit the app so that CAF declines it and the secondary lenders can have a look see at it. This is a rare situation, but it does happen from time to time.

 

Sorry for the long post, but wanted to clear the air. I'd enjoy discussing this system with any of you guys (Marv especially) and your questions, critiques, comments about it.

[MarvBear]

I am familiar with CarMax.

 

And I appreciate your post regarding them, however that does not change my opinion of their pricing structure on used vehicles, nor the performance of their F&I Department as a whole.

 

Their system may make some people feel more comfortable, then so be it. IMO not the wisest way to go.

 

Their Sales Managers/F&I persons from my perspective as an insider in the business and my dealings with the banks that likewise deal with them, well...we all think they could be a lot better.

 

I inherently dislike the automation of approvals, because I come from the day when I talked the banks into buying the contract on the rates I set, not what they wanted as a lender.

 

Hence my derision of the CarMax system.

[wingnut]

Well, it's not completely automated. It is in the sense what lenders get to see it, but once those lenders look at the application, there's a real live analyst looking at the app. The sales mgrs. do have the power to negotiate with the banks, just as you do. Sadly, from my experience working there, you're correct that some of them aren't very good at it.

 

As far as the price of the cars, the cars price is a fair price, maybe more than an experienced negotiator could get somewhere else, but definitely not a ripoff by any means. I've seen far more situations where someone with "past issues" get screwed over by a dealership taking advantage of the person just because they're desperate to get approved. Also, there is something to be said for the peace of mind that comes with the certification of all the cars they sell.

[MarvBear]

I would agree that all cars that went thru a certification process that could be proven should bring a consumer more peace of mind.

[wingnut]

In any event, Marv, I just found this board earlier today while trying to do some research on my own credit situation. Please don't think I'm coming on here to be some obnoxious troll. From what I can tell your providing a great service to folks here. Keep up the good work.

 

By the way, maybe you can help me out with something. I'm always looking for more resources. When customers of mine are rate shopping, I usually refer them to lendingtree, eloan, or roadloans(as far as online sites). What sites do you suggest are best for vehicle financing? You may have discussed this at great length in a previous thread (or threads). Links to those, or just a quick rundown from yourself would be greatly appreciated.

[MarvBear]

Credit unions are my favorite source.

 

I think lending tree roadloans etc could generate too many inquiries, so I personally do not like them. And if an inquiry via their sources generates a TD from one of the same banks that I use, almost impossible to have it overridden. So they effectively shoot themselves in the foot.

[greyteal]

I will add my 2 cents on carmax and why i will NEVER buy a car from them again. we traded in an expedition for a camry back in november of this yr. We had them submit for financing and wells farrgo came back with an approval on my husband. i was not listed on the loan. We sign all the purchase paperwork and take the car home, husband then goes out of state for a week and i recieve a call stating that carmax needs me on the loan since wells fargo was under the understanding that we were rtading the expedition AND our caravan, in noway did we ever state that at all ever and never even drove the van to the lot!and that unnless i came in and cosigned hubbys loan they would not be able to finance it. at this point weve had the car 3 weeks. I told them they needed to speak to my husband and take care of this, they flat out told him that i had to be on the loan(which incidentally screwed me on buying a house with only my credit!) or we were out of luck. so needless to say i am on the loan. Then after another few weeks we get the call that we have to have the license plate reissued and that we needed to do that the same day....husband already asked them when we resigned the paperwork if we would have to take care of the plate, they stated no the plate was fine. well we ended up making them mail the plate to us and then we mailed the other one back.

will NEVER buy from them again!

Tiffany