Advice wanted on PenFed's low-rate car-buying service

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Topic Author
winglessangel31
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Advice wanted on PenFed's low-rate car-buying service

Post by winglessangel31 »

Hey all,

I'm a fresh graduate starting a new job with a salary in the 28% tax bracket, but with very little liquidity as I will just be starting. I understand that many people suggest buying a used car and/or paying cash, but at this stage of my life, I'm slightly image-conscious (and will be very unwilling to buy a really old car that doesn't look good anymore), tech-loving (and will be a little unhappy to own a car [for 8+ years!] without the features I have come to learn and love like Bluetooth streaming / phone connectivity and so on), and mechanically-unhandy (and will be attempting to learn about cars over the next few years so I won't be too comfortable risking buying a too-used car that might come with troubles). Thus I have my eyes set on cars from 2011 and onward, either new or with a lot of life left in them; that will likely mean something in the $10k--20k range, and my very little liquidity kind of means that I will need to take out a loan.

I have also done something really bad. I have fallen in love with a certain car. It makes my purchasing decision a lot easier (I think), but it does make it harder to consider other options (well, to be fair, I considered other options first, and then realized that this car seems to be the best option for me, and so I fell in love with it). It is the Hyundai Elantra GT.

As I understand it, PenFed's auto loans are the lowest in the industry. I am not yet a member (and do not have a relative in the armed forces) but I know I can be one by donating $15--20 to one of the funds. As I understand it, I can find the best dealer with the best price on my own, and then approach PenFed for a 1.74% auto loan. However, I realized today that PenFed has lowered the interest rate on loans obtained through its car-buying service from 0.74% to 0.49%. That is slightly tempting, and if I am calculating this correctly, this will suggest that I could save about $200-something if I can get the same price through the car-buying service. However, I don't know how possible that is; PenFed's car-buying service suggests a "target price" below MSRP that is not as low as the prices I've seen from some of the dealers I am in contact with at the moment. I'm wondering about the possibility of negotiating the price down even more after if I go through PenFed's car-buying service and get in contact with (possibly the same) dealers.

Questions:
1. Do you have experience with PenFed's car-buying service? How possible is it for me to negotiate the price down even more such that it matches what I've been quoted from dealers contacted not through the car-buying service? I understand that sometimes these dealers quote prices with every single possible discount and rebate, but this is not the case this time. I have done my best to make all else equal, except for the part where I get VIP pricing (a fixed discount) with one or two dealerships because of my employer---is it possible to also get that discount applied even after going through PenFed's car-buying service?

2. Do you have experience with PenFed's auto loans (not through the car-buying service) and have you had any trouble with them? I'm assuming that I won't have much trouble with them because I have good-to-excellent credit. My credit history is short (first credit card in November 2011) but great (4 revolving accounts at this point, total credit limit around $9k, scores from CreditKarma: 751, CreditSesame: 740, Quizzle: 721, and Credit: 747). I hear that PenFed is wary of customers who seem to be looking for new credit but am unsure if that is just for its credit cards (I would like to apply for their Cash Rewards [gas] card, too, though), and my latest cards (2) were from January 2013.

3. Would you like to encourage or discourage me from this venture? Especially with regards to my vehicle of choice? :mrgreen:

Thanks all!

Edit: The car was bought with the Hyundai Motor Finance $1500 discount, and I'm in the process of refinancing with PenFed at 0.99%. The perfect scenario panned out. :) :beer
Last edited by winglessangel31 on Sat Feb 01, 2014 1:25 pm, edited 1 time in total.
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by Outer Marker »

No personal experience with it -- but see nothing wrong with your car of choice. Reasonably priced, reasonably reliable, Asia built -- and a long warranty that eleminates risk while you're starting out.

Edmunds.com is invaluable when reseaching/negotiating cars. You can calculate very precisely what the dealer actually paid for the car. "Invoice" is only part of the story -- because, for instance, on Hyundia's there is a 3% "dealer holdback" paid from the manufacture to the dealer, which most customers don't know about. When negotiating, start with the absolute dealer cost (i.e., subtracting the holdout from the invoice price), and also subtracting any available incentives, i.e. customer cash and rebates. Then, figure out what you're willing to offer the dealer in profit for the task of writing up the contract. (2-3% might be reasonable). Also, negotiate hard on any "paperwork" fees -- and if they insist on charging you that fee, then insist on lowering the price by the corresponding amount.

You'd be amazed how it changes the negotiating equation when you have the edmunds print outs and numbers in front of the salesperson, and you're asking them how much they will charge you to write the contract, versus you tring to negotate down from an inflated asking price.

I see that Hyundia is offering $1500 rebate IF you finance through their company. So, I think you'd do best taking the cash and the finanacing -- then refinance in a month or two to the lower penfed rate after the rebate check clears.
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sperry8
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by sperry8 »

PenFeds service is run by TrueCar.com. They are the same service that run the majority of the car buying services out there (USAA, Amex, etc). They actually dont offer the same price via each service however. But one of the good things about using a car buying service is that you can continue to negotiate. Start with PenFed's car buying service, get the lower loan rate - but when at the dealership negotiate further. I've done it this way (via Amex's service) and it works.
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Topic Author
winglessangel31
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by winglessangel31 »

Outer Marker wrote:I see that Hyundia is offering $1500 rebate IF you finance through their company. So, I think you'd do best taking the cash and the finanacing -- then refinance in a month or two to the lower penfed rate after the rebate check clears.
:oops: Time to learn about refinancing. Never really thought of it as a tool, always had the impression that it's a "last resort for people who have to live in debt for just a little bit more". Thanks for the tips! :)
Default User BR
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by Default User BR »

Outer Marker wrote:I see that Hyundia is offering $1500 rebate IF you finance through their company. So, I think you'd do best taking the cash and the finanacing -- then refinance in a month or two to the lower penfed rate after the rebate check clears.
You'd have to review the terms of the Hyundai loan. It might have a pre-payment penalty for just that reason.


Brian
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Aptenodytes
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by Aptenodytes »

I used it for the first time about three months ago. I was looking for a Honda Accord. The service was not as user-friendly as I was expecting. You still have to do the research to find out the lowest-possible fair price to make sure the offers you get are good. There's no point paying $500 more for the car to save $200 in interest. My experience was roughly as follows:

1) As in your case, I knew exactly what I wanted, so I entered those terms into the service and got something like 3 offers.

2) There was a significant difference in price among the responses.

3) However, the lowest-cost offer was highly unresponsive to requests for follow-up. They didn't have the color in stock I wanted, and wouldn't answer my questions about being able to get the correct color. If I were running TrueCar I would kick them out.

4) The other offers were all the same price, if I recall correctly. I worked with the dealer that was closest to me. At the beginning they were just as sleazy as any other car dealer, even more so. Lots of bogus come-ons about special deals that were going to disappear soon, come in today to get the best offer, etc. However, it didn't take too much work to convince them that I was looking to buy a specific car at a specific price, and then the salesman was pretty reasonable.

5) I expected to be able to get the dealer who answered my questions to match the price of the dealer that didn't. I thought that working through TrueCar I had a credible case that if they didn't match it I would work with the other dealer, even though in fact I didn't want to do that because they never gave me straight answers to my questions and I didn't want to drive a long distance chasing a phantom price.

6) The responsive dealer didn't match the other TrueCar offer, but instead told me that the other dealer was lying, and that the price they quoted was impossible and omitted a mandatory fee. I did research using Consumer Reports' service showing actual prices paid for cars, and I think the dealer was correct that the low-ball dealer was lying. I didn't reveal this information, and I wasn't 100% sure because they seemed willing to be deceptive in other aspects of the initial interactions. Needless to say, this wrinkle was not something I expected when I chose to use TrueCar/PenFed.

7) In the end, we split the difference and the responsive dealer took off half the difference between their price and the low-ball price. The final sale price was at about the 2nd percentile of what CR reported people paying, so I feel reasonably good about having ended up at a fair price.

8) Once we got to that point, everything was very smooth. They didn't try to tack on any junk costs or bogus add-ons like VIN engraving, rustproofing, etc.

9) All things considered it was a lot more work than I was expecting. It offered zero benefit in terms of getting a low price. The standard procedures for getting the best price had to be followed anyway. The only benefit was that very low rate from PenFed.

I'm not sure I'd bother with the service again. I usually buy cars with cash, but the combination of very low rates and an over-budget home remodeling project nudged me in the financing direction. If I had to finance a car again, I'd probably avoid TrueCar.
donall
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by donall »

We used PenFed's car buying service and loved it. We got the same price without haggling as if we had haggled all day....a great quality of life issue for us. Use the search option on this site to read about experiences that others had with PenFed. As Outer Marker said, Edmunds.com is great for obtaining more information about dealer incentives. Information from research is your best friend in negotiations. I also would not get hung up on getting the best price, as dealers are much more skilled in negotiation than you will ever be, because they do it many times a day. Just look for a very good price with convenience. low has. and you will be happy.

Aptenodytes, you were wise to work with a dealer that you felt you could trust. I've had the experience of buying the car and then coming in to pick up the car and sign the final papers.... and the price went up!
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TimeRunner
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by TimeRunner »

Check out Autoland.com, which is owned by a bunch of credit unions and operates in 16 states, according to their website. I used them to buy a Honda in 2009. They located exactly what I wanted (options, color) at a dealer in N Calif, arranged to deliver it to my house in five business days, and the entire transaction was done via email (PDF) and bank wire. No negotiation bother, and a price right in line with USAA and Kelly Blue Book estimates. Got a call from the truck driver an hour out from my house, arranged to deliver in a nice nearby open parking lot, and he rolled up an auto transporter, rolled my car off the back, handed me the keys, and it was done. All papers, etc, from original dealer were in the vehicle which had been dealer prep'd prior to shipment, right to the full tank of gas. Easy! (I have no affiliation with the company and was not even a member of a credit union. I did not finance and paid in full.)
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fundseeker
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by fundseeker »

I haven't taken the time to read all of the posts so I may be repeating some things, but you sound young and possibly in a position to get ripped off by these dealers. In my recent experiences (but with Hondas), I did not find any car buying service to be very helpful. I just negotiated hard usually online or on the phone and not in person, after I picked the exact car with the exact options I wanted. And, most importantly, I had each dealer give me the OUT THE DOOR price, meaning exactly what I had to write a check for the get the car out the door. If you approach it any other way, it will not be possible to compare apples to apples because they will add a lot of dealer add ons and doc fees. And speaking of add ons, we have dealers who add all kinds of crap to their cars to raise the sticker several thousands dollars, and these are things that you either do not need or can add yourself later if you want them. So, I am just suggesting that you fight hard for a great deal, and get their OTD price. And please don't fall for the high pressure to buy an extended warranty. Good luck.
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Hexdump
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by Hexdump »

I have no experience with their auto loans but I just went through the research phase for a new car and the Hyundai Elantra made the short list along with a Ford Focus. I was looking for a hatchback and these 2 were the best bang for the $$$.

I think I could have gotten either one new for 2013 at close to 20k.
Topic Author
winglessangel31
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by winglessangel31 »

donall wrote:We used PenFed's car buying service and loved it. We got the same price without haggling as if we had haggled all day....a great quality of life issue for us. Use the search option on this site to read about experiences that others had with PenFed. As Outer Marker said, Edmunds.com is great for obtaining more information about dealer incentives. Information from research is your best friend in negotiations. I also would not get hung up on getting the best price, as dealers are much more skilled in negotiation than you will ever be, because they do it many times a day. Just look for a very good price with convenience. low has. and you will be happy.

Aptenodytes, you were wise to work with a dealer that you felt you could trust. I've had the experience of buying the car and then coming in to pick up the car and sign the final papers.... and the price went up!
I feel sorry for Aptenodytes' experience, but I guess it worked out. :P

The problem about getting hung up on getting the best price is that I do that a lot. :oops: I'll just have to convince myself that some things are not worth the required effort. Thanks for knocking some sense into me. :P
TimeRunner wrote:Check out Autoland.com, which is owned by a bunch of credit unions and operates in 16 states, according to their website. I used them to buy a Honda in 2009. They located exactly what I wanted (options, color) at a dealer in N Calif, arranged to deliver it to my house in five business days, and the entire transaction was done via email (PDF) and bank wire. No negotiation bother, and a price right in line with USAA and Kelly Blue Book estimates. Got a call from the truck driver an hour out from my house, arranged to deliver in a nice nearby open parking lot, and he rolled up an auto transporter, rolled my car off the back, handed me the keys, and it was done. All papers, etc, from original dealer were in the vehicle which had been dealer prep'd prior to shipment, right to the full tank of gas. Easy! (I have no affiliation with the company and was not even a member of a credit union. I did not finance and paid in full.)
I did and I didn't quite like the price. Maybe I'm misguided, but it looked $1k--2k higher than elsewhere.
fundseeker wrote:I haven't taken the time to read all of the posts so I may be repeating some things, but you sound young and possibly in a position to get ripped off by these dealers. In my recent experiences (but with Hondas), I did not find any car buying service to be very helpful. I just negotiated hard usually online or on the phone and not in person, after I picked the exact car with the exact options I wanted. And, most importantly, I had each dealer give me the OUT THE DOOR price, meaning exactly what I had to write a check for the get the car out the door. If you approach it any other way, it will not be possible to compare apples to apples because they will add a lot of dealer add ons and doc fees. And speaking of add ons, we have dealers who add all kinds of crap to their cars to raise the sticker several thousands dollars, and these are things that you either do not need or can add yourself later if you want them. So, I am just suggesting that you fight hard for a great deal, and get their OTD price. And please don't fall for the high pressure to buy an extended warranty. Good luck.
Young, yes, about to get ripped off, I hope not. I tend to be able to hold my ground somewhat, but who knows... car dealers kinda have a bad reputation across the industry. So far dealers have been telling me "sell at" prices, and I'll just clarify that these are "out the door" prices where all their miscellaneous fees are already included. Not gonna be pressured into buying the extended warranty. Thanks! :)
Hexdump wrote:I have no experience with their auto loans but I just went through the research phase for a new car and the Hyundai Elantra made the short list along with a Ford Focus. I was looking for a hatchback and these 2 were the best bang for the $$$.

I think I could have gotten either one new for 2013 at close to 20k.
Call me crazy but I'm trying to bring it down by at least 10%. :greedy
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winglessangel31
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by winglessangel31 »

Default User BR wrote:
Outer Marker wrote:I see that Hyundia is offering $1500 rebate IF you finance through their company. So, I think you'd do best taking the cash and the finanacing -- then refinance in a month or two to the lower penfed rate after the rebate check clears.
You'd have to review the terms of the Hyundai loan. It might have a pre-payment penalty for just that reason.


Brian
Also known as a closing fee, yes? #learning :happy
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winglessangel31
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by winglessangel31 »

So, here's an update. I got the car not through the car-buying service, and I opted for the 2.49% Hyundai Finance option which gave an automatic $1500 rebate (no prepayment penalty). Guess what happened to good old PenFed's auto refinance rates?
At time of post - 1.74%
At time of car purchase (2 weeks ago) - 1.99%
Now - 2.24%

:oops:
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mike143
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by mike143 »

winglessangel31 wrote:So, here's an update. I got the car not through the car-buying service, and I opted for the 2.49% Hyundai Finance option which gave an automatic $1500 rebate (no prepayment penalty). Guess what happened to good old PenFed's auto refinance rates?
At time of post - 1.74%
At time of car purchase (2 weeks ago) - 1.99%
Now - 2.24%

:oops:
That's alright they are a moving target. When we bought a car PendFed was at 2.49% and used it to negotiate Honda down to 1.99%, when PenFed went down to 1.49% we refinanced with them.
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Topic Author
winglessangel31
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by winglessangel31 »

mike143 wrote:
winglessangel31 wrote:So, here's an update. I got the car not through the car-buying service, and I opted for the 2.49% Hyundai Finance option which gave an automatic $1500 rebate (no prepayment penalty). Guess what happened to good old PenFed's auto refinance rates?
At time of post - 1.74%
At time of car purchase (2 weeks ago) - 1.99%
Now - 2.24%

:oops:
That's alright they are a moving target. When we bought a car PendFed was at 2.49% and used it to negotiate Honda down to 1.99%, when PenFed went down to 1.49% we refinanced with them.
Through the car-buying service today, 0%
Regular refinance or new loan (36 months), 0.99%
Niceeeeee :beer

Probably the lowest it will ever get!
tj
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by tj »

Yeah, thought about refinancing my Auto Laon from Navy at 1.79% to PenFed at 0.99%, but it's only a $6k loan at this point, not sure it'd be worth the effort...
BanditKing
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by BanditKing »

Make sure you know EXACTLY what you want all the way down to the speed stickers, all-weather floormats and mudflaps.

1) First, it's a fine car for a new guy with no kids. :)

2) With the discount/rebate on the dealer financing you can negotiate a bottom line deal from the dealership. Make sure there's no pre-payment penalty and then just refinance a month later. The dealer doesn't care - they get the cash from getting you to sign up originally.

3) Get the buying service to get you a price too. I used one through USAA and they gave it to me right online. If it's better, use it. If not, work with the dealer direct.

But the key is to know exactly what you want walking in, and accept no substitutes. Dealers are great and convincing you that you want substitutes.

If you want to get really fancy, call several dealerships, ask for pricing on the exact specs you want and make them play off against each other.
tj
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by tj »

BanditKing wrote: If you want to get really fancy, call several dealerships, ask for pricing on the exact specs you want and make them play off against each other.

I did this, but with E-MAIL. Way more efficient. Make sure you don't give them a real phone number in the contact forms or they will hound you with calls trying to get you to come in..
orlandoman
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by orlandoman »

Buying Services - understand that when you use a buying service, like the one's mentioned, the auto dealer has to pay about $300 for belonging to the buyer's service & getting the lead. That means the auto dealer has potentially $300 less negotiating money to give up during the negotiating process. If you do your research and are a good negotiator you don't need a buying service & potentially get a better deal ..... if you don't do your research and/or are not a good negotiator, you might want to use a buyong service.
"Borrow money from pessimists -- they don't expect it back"
Topic Author
winglessangel31
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by winglessangel31 »

Oh I already bought the car months ago. :P I was just pointing out how the interest rate has plummeted.

Now to convince PenFed to refinance my auto loan... >.< :greedy
pablolo
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by pablolo »

penfed now has 0% financing if you buy through them. (true car). it is for 36 months
jedblanks
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by jedblanks »

0% APR
New & Used Vehicles for 36 months
0.74% APR
New & Used Vehicles for 48 months
0.99% APR
New & Used Vehicles to 60 months
Topic Author
winglessangel31
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Re: Advice wanted on PenFed's 0.49% car-buying service

Post by winglessangel31 »

winglessangel31 wrote:Oh I already bought the car months ago. :P I was just pointing out how the interest rate has plummeted.

Now to convince PenFed to refinance my auto loan... >.< :greedy
To complete the thread, I did purchase the car with the $1500 Hyundai Motor Finance discount, and financed with them at 2.99% for 60 months. After aggressively paying much more than the monthly payment (to save on interest, because I didn't expect myself to be able to otherwise earn at more than 3% reliably), I tried to refinance with PenFed at 0.99% for 36 months in early January. They turned me down (pyramiding debt, blah blah blah, because that car purchase was not even half a year ago and I opened a credit card with them at that same time, so there have been new credit lines in the past half year) and I had to ask for 2 or 3 reconsiderations, trying to convince them that I loved them and their rates, and that I'd be an excellent payer since I already paid my HMF loan through about a year in advance; eventually they agreed to refinance at that rate for that long, but $1000 less than I initially asked. No problem, because I could make up the difference.

The decision didn't happen until after I called them for the 4th time since I got conditionally approved. This morning. However, as it is the 1st of February, they updated their rates and increased the APR to 1.99%. I called to convince them that the delay was really unnecessary (and their fault :P), that I called so many times since being conditionally approved trying to know where the bottleneck was, and why after submitting my last 2 paystubs they still have yet to approve my loan. They took a few minutes to adjust my paperwork to reflect the 0.99% rate that was published at the time I initially applied.

Waiting for the check to come in the mail, but this is to PenFed: they may not have the best internet system (lots of weird behavior), but for customer support on the phone on a Saturday, they're great! :) :beer

Now to look at options... whether to pay more than my monthly payment, or to look for ways to earn at more than 1%!
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