Using FRB Personal Line of Credit to buy a car

Creating this thread for those who want to discuss or share their experiences with First Republic’s Personal Line of Credit. In my case, I used it to pay off my Mach-E at a lower rate than through Ford Credit.

This PLOC has several potential automotive uses:

  • Finance new or used vehicle
  • Finance lease buyout
  • Refinance existing vehicle loan
  • Alternative to a lease or balloon loan

Available: CA, OR, WA, WY, MA, FL, CT, NY (details)

The current rate is from 3.95% APR with discounts, which is better than many subvented new car programs, and way lower than any other unsecured loan I’m aware of.

In a nutshell, folks who are approved get access to a line of credit (ranging from $70,000 to $350,000) to draw from over a 2 year period. Only interest payments are due during this period, although you could certainly make principal payments each month. After the initial draw period, there’s a repayment period ranging from 5 to 8 years.

Alternative Way to Finance a New/Used Car

There are a few ways to approach this PLOC. You could treat it like a regular loan and schedule monthly principal payments to pay it off over a desired interval (e.g., 60 months).

If you’re keeping the vehicle over a shorter period (e.g., 24 months) and like the lower payments of a lease or balloon loan, you could make smaller monthly principal payments – for example, only enough to cover the estimated depreciation that would occur over the period, with the principal effectively being the final “balloon” payment due at the end.

This PLOC is not for everybody but it does offer a lot of flexibility and quick access to available funds, without having to apply for credit each time. If you buy a car using funds from the line of credit, you as the owner get the title and there’s no lienholder, making things simpler.

Here is the product description with our affiliate link, which will help support our work! Moreover I thought I’d share this because I had a genuinely good experience with First Republic and think it’s a pretty good hack.

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I did this with First Republic with my Bronco back when the rate was 2.25% :sunglasses:

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Foreshadowing my lease if I keep it. Joking aside, I did a quick quote and rate is ok if you are willing to put some cash in their account. The no lien on car title is a huge advantage.

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After talking to the loan officer they were pretty stringent about liquidity. My guy said they were looking for 80-100k liquid for most applicants.

We just did this so we can finance an upcoming Volvo XC90 + a possible Rivian in the year 202X.

One note to add: to get the full discount to 3.95% you’ll need to hold 20% of the total LOC amount in your checking account (which gets basically zero interest). So 14k for a 70k LOC. I believe they only check this 3 times though until the draw period is over.

This is a dumb question but do most people actually keep that much money liquid? I’m under the impression that checking and easily accessible emergency funds should be 3-6 months of expenses. Why would someone keep casually keep 80,000-100,000 in a bank account?

I am not sure if he meant across retirement accounts or just strictly checking/savings. But I guess if they are giving you access up to 350k they want to make sure you have the ability to weather the storm. Most Americans are paycheck to paycheck.

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It can be checking, savings, money market and I believe brokerage accounts. There are several asset types that qualify as liquid assets, and so will meet FRB’s requirements. This product is an unsecured loan which is why First Republic has pretty stringent rules… and they are known to specialize in low-risk, high net worth clients.

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Backing out into cash in hopes of a collapse so I can return to the original car flipping.

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Someone double check my math but if you have to keep 20% in a 0% account (and CD rates are currently 5%), then you would add 1.25% to the 3.95% to get your effective rate. 5.2% is still decent in today’s market, especially given the flexibility of the PLOC.

-I believe 3-6 months is the minimum recommended to have liquid for emergencies. I don’t believe there is a recommended maximum. People keep higher amounts of liquidity not only for emergencies but for future investment opportunities, peace of mind, or lack of other acceptable investments.
-Liquid includes CDs and bonds that are common investments
-I know many people that have >$20k in monthly expenses. If you live in a high cost area, it’s easy to have a $10k mortgage payment, $2k for 2 car payments, $10k for 2 kids in private school, etc.

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The question I have is wouldn’t personal line of credit hurt/impact your credit score vs a traditional auto loan since there is collateral?

??? Credit is credit. Collateral means they can easily get their money back if there is a default.

Thanks for confirming. This is very enticing for an exotic car financing.