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Seven Things To Know About Car Loan Credit Reports
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Seven Things To Know About Car Loan Credit Reports
It's essential to know these credit report basics before you go car shopping.
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Furthermore, his suggestion dealers are eager to share that financing with customers is very misleading. One thing Mr. Eleazer fails to mention is, while dealers are very happy to have customers finance through the dealership, he fails to mention one of the primary reasons for this is it allows dealers a chance to make a considerable profit. Dealers often add to the interest rate at which a customer actually qualifies. For example, a customer may actually have been offered a 2 percent interest rate by the dealer's bank. However, the dealer may offer the customer a 3 percent interest rate. Of course the dealer and folks like Mr. Eleazer pocket a nice portion of the difference. This is called dealer reserve. It is most successful, from a dealer's perspective, with the more unsophisticated car buyer and with the subprime, people with poor credit, market.
Finally, new car dealers do not finance vehicles, contrary to what Mr. Eleazer states. The financing institution finances the vehicle and establishes the base interest the customer will have to pay as well as the amount of money which will be included in the loan. The F&I folks, like Mr. Eleazer, use that information to concoct a deal which will result in the most profit of the dealer and the F&I manager.
Prior to visiting any dealer, a potential buyer should research the financing options available to them as well as the going prices for the vehicle and KBB or other value for any trade vehicle. With this knowledge, a buyer can assure a good deal.
With proper research, it is almost always a good idea to allow folks like Mr. Eleazer an opportunity to arrange financing. They often really are able to arrange a lower interest rate than the buyer is able to obtain. However, the key is to make sure Mr. Eleazer and other F&I managers do not add to interest rate.
And always, watch for those pesky document fees.
The good thing is a knowledgeable buyer is more than a match for the best F&I person in the world. Personally, I always find it amusing to anticipate the next gambit the F&I manager will play. Making a game of dealing with the F&I manager can be a hoot.
Buying a car requires lots and lots of patience! It took me almost 5-months to find my dream car and not even have the slightest doubt in my mind of my decision.
As to your statement that the "new car dealers do not finance vehicles", one need look no further than the top of a Retail Installment Sales Contract they signed at the dealer and the description in the box where the Dealership name reads Creditor-Seller. That means the dealer IS the originating creditor and therefore IS handling the initial financing until it is assigned/sold to a finance company.
I used to work in retails and used car sales, the reason why they want to run credit check on you because the dealer will get a "kick back" (more money from credit unions) when the car salesman will get an increase in their commission, and the store will look "good" if you perform a credit check, either if you pass or not, or if you want to purchase a car or not.
Most car salesman do not care about identity theft as long as the information you put down matches your driver license.
FTC Staff Advises Automobile Dealers May Not Obtain Credit Reports on Consumers Out for a "Test Drive"
Impermissible Credit Report Use (Nolo)
If a credit bureau, creditor, or someone else violates the Fair Credit Reporting Act, you can sue and get damages (Nolo)
"According to the Federal Trade Commission, a car dealer does not have a permissible purpose to get your credit report if you're simply asking for information about vehicles and prices, or if you just take a car out for a test drive--because at that point you haven't initiated any transaction."
Car dealer pulling credit report multiple times (consumered.com)
The FCRA at car dealerships: the FTC’s curious conclusions about “permissible purpose” (fcradefense.wordpress.com)
They ran his credit without approval (hanfordsentinel.com)