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Auto Loans – What a Hassle! (UPDATED)

UPDATE:
CarMax corporate customer service contacted me. Apparently, 7.69% is the lowest APR they offer any of their customers... even customers like me with a credit score in the high 700's to low 800's. They were very apologetic about any misunderstandings that may have occurred. I was ready to let it go in my mind before they called, but I'm glad we were able to open a dialogue and get to the root of why I was dissatisfied with the loan experience (the actual car BUYING experience was great!).
Bottom Line: Buy a car from CarMax, but don't (under any circumstances) go with their "perferred rate" financing. You're more than likely to get a better loan rate getting financing through your bank or local credit union.

I'm going to try to be as objective as I can on this topic. But, needless to say, I'm pretty ticked off.

From my last post, you know I unexpectedly had to purchase a new car. I had to finance a portion of the purchase (which I'm not too happy about since I'm trying to do the Dave Ramsey thing).

At the time of purchase CarMax pre-approved me for a loan from Bank of America for 7.69%. Woah... kind of high in my books. They told me I had three business days to procure my own financing so I shopped around.

Since my mortgage is with Bank of America, I decided to try them and got a great interest rate of 5.29%. I talked with on of the Bank of America loan officers and she faxed me a letter which she said would be sufficient to switch the contract on the car. The loan officer said that since CarMax was an authorized Bank of America dealer, they would be able to do this no problem whatsoever.

I went into the Carmax on the third business day and that's where things started to get confusing. All I got were excuses. Here's some of the things I heard from the business office:

"I've never seen a letter like this." - Bank of America said they use these documents all the time

"This is the 4th business day." - I purchased the car on Thursday. Friday (1), Monday (2), Tuesday (3). I fail to see how it was the 4th business day unless they were counting from when we were approved for the loan (which was Wednesday).

"Your loan is already with Bank of America. We can't change the contract unless it's with another bank" - Why did Bank of America say that I could?

"You'll need your wife here to sign the new contract" - Then why did she sign a power of attorney, allowing me to do business for her? She could not have made it to the business office by the time they closed that night.

"You need to call and deal with Bank of America directly. Since they're the current lien-holder, they can just switch the terms over to the better rate."

It's that last quote that I want to talk about. I think that they just wanted me out of there. So I did what they said and when home. The next day I called up the bank and told my loan officer what had transpired. She said that I had been "grossly misinformed" and that they could not simply change the terms of my current loan. It was going to require a refinance to do that which would incur a $200 fee.

Great. Now I was past the 3-day limit and totally screwed (in my opinion). Now I'm stuck with a 7.69% rate on my auto loan and it won't be worth it to refinance because of the fee.

I asked the loan agent how my rate was calculated and she said that it was solely based on my credit score and the loan amount. A conclusion I can come to is that CarMax purpose artificially increases the interest rate to take a cut (2.4% APR in my case). Another conclusion could be the fact that when our salesperson entered the loan into their computer, he neglected to take into account the $5,000 down payment I was providing. The computer then calculated the APR based on a $13,000 loan instead of an $8,000 loan like it should have been.

My loan officer was very helpful and said she'd reduce the interest rate to 5.04% to try and help offset the $200 fee. I worked out the numbers and if we pay it off as aggressively as we're planning, it would cost us more money to reduce the rate from 7.69% to 5.04%. So we're leaving it.

Oh well.