Ok, not CASH cash, but writing them a check, no financing of any sort whatsoever. When going through the machinations yesterday, one of the schmoozing employees mentioned, “well, even if you don’t finance, we have to run a credit check”.
We close on this deal in a couple days, and they do not yet have a social security number (but we know there’s a place on the form where they’ll ask for it). They do however, have a copy of a driver’s license (with no SSN on it)
This is a fairly sizeable (I’ll add reputable, if there is such a thing…) car dealer, but of course they have all the usual hoops when one is buying. The car is just over $10K. Our credit is fine, it’s just the principal of the thing, not to mention that I don’t want an unnecessary “tap” on our credit. I’m wondering if due to Patriot Act or some such if they are required to do the credit check, even for cash buyers. And, if not, would they cave on the issue if we decided to walk away over it (something we are perfectly willing to do).
Anyone have any experience working for a car dealer? Thanks in advance.
I’m pretty sure they run a credit check because they want to have ammunition to switch you to financing. Even if you’re prepared to pay cash, they’re prepared to show you financing at their low rate will actually save you money. Dealerships make money on the front end (profit on the car they’re selling) and money on the back end (financing and insurance, or F&I). They are often willing to lose a bit of money on the front end if they are going to make it up on the back end.
Offer them a certified check. If they demand a credit check even with that, tel them you’ll walk.
Well, I just bought a new car with a personal check, and they just took it and gave me the car like that, So they apparently don’t have to run a credit check. I live in a small town, which may be a factor.
A few years back, I bought a used pickup for cash (around $13K, IIRC) and went through a good half-hour spiel wherein the dealer’s finance manager attempted to “prove” to me that I’d be SO much money ahead if I financed the truck through the bank he had in mind. I can’t honestly say whether the dealer ran a credit check or not – the subject wasn’t raised. But I wouldn’t be surprised if he did, considering how quick and easy it is to do.
A friend who works in a bank later told me that a loan that size would probably net the dealer around $500 from the bank.
The best thing to do if you are writing them a check is to go to your bank and get a cashiers check. Also it is a good idea to have your own copy of your liscence when you go in and write on it, in front of the salesman, “Not to be used for credit check purposes”.
I bought a car with cash and all they did was give me the papers I would need to take to the courthouse, and the receipt. They didn’t even ask for a copy of my insurance card.
If they have your Driver’s liscence, you can bet that they have already ran your credit. And every credit check shows up on your credit history.
p.s. please excuse my soelling…pain meds
Both Bricker & Philster are correct. They want to run a credit check because they will use it to try and sell you credit (along with undercoating, over coating and every other dealer profit maker that can find). BUT on the other hand, it is rather common for a type of scamster to go in, buy a car with a large check, have it bounce, then get a nice car to drive around in until the repo men catch up with you.
So, if you don’t want a credit check (and do note- an “inquiry” can sometimes cost you “points”), then bring them a cashier’s check.
I wish the car dealers here would do that. Every single one of them insists that they have to turn in the paperwork and get your license plates for you. And they charge $250 to $300 for the service.
Pardon the slight hijack here – it’s been a few years since I was car shopping, but I recall that most dealerships I visited took a photocopy of my license before they would even let me go for a test drive. Were they checking my credit while I was out for a test drive, before we’d even started talking money? (BTW, my SSN is not on my DL. Does that make a difference as far as their ability to run a credit check?)
I’m not sure I’d take a walk. However, it they try to show that they will give you a much better deal on the car if financed than they will for cash it might pay you to tell them they’re asking too much for car. And watch them like a hawk because as Bricker said, and I’ll say it even stronger, dealers make money on financing and they are experienced at their game of convincing people about things that people didn’t start out being convinced of. But it the cash price is right and you refuse to be drawn into a financing arrangement I don’t see how you can get hurt although they might be a little better at after-sale support if you finance rather than pay cash.
If you can get a better price on the car if you agree to finance, is there anything wrong with turing around and paying it off on the first payment (providing the financier has no penalty for early payment)?
Something similar happened to us recently. We had already contacted our credit union and arranged financing because they were going to give us an excellent rate. The dealership had access to this information through an existing arrangement with the credit union. I figured we could go in, pick the car, tell them which credit union and our loan amount, thinking that this would all be super easy. They still made us fill out loads of information. I kept saying, “I think they are going to check our credit. Why?” But, my very laid-back hubby wasn’t getting as worked up about it as I wanted. So, we passed over the information.
Forever and a day later, we are finally ushered in to see the finance guy. He’s all like “Yeah, we ran your credit and checked all of our loan companies to see if we could get you a better deal. We can’t compete with your credit union, though, so…”
<insert annoyed scream here>
There was a reason we chose to stick to our credit union. I didn’t want any other offers, or a hit on our credit. So anyway, there is just another scenario that others can hopefully avoid. Next time we buy a car we are bringing a certified check. Grr… live and learn.
According to the Fair Credit Reporting Act running a credit check without your permission is illegal.
CarBuyingTips.com reports, "[T]he Federal Trade Commission (FTC) reiterated that dealers are prohibited from getting your credit report while out on a test drive. Violators can be fined up to $2,500 under the Fair Credit Reporting Act. Credit reports may not be obtained until you approve it in writing. By running a credit check, dealers have an unfair advantage because they know your financial status, plus it lowers your credit score by about 5 points. "
They also state on that same web page …
"Don’t be held hostage! Don’t give them your Drivers License or Social Security number!
You’ll need it to break off negotiations and leave. Many new car dealers photocopy your license before a test drive. Tell them there is no reason to. They’ll say insurance require it. Car rental agencies don’t copy your license and you’re taking their car for a week! Some dealers copy your license “in case you rob the salesman”. Other dealers copy your license to run unauthorized credit checks on you during your test drive, still a top complaint we receive. Make copies of your license and when they ask for your license, hand them the copy, get it back when you leave. Write on the copy the dealer may NOT run a credit check on you. Remind them the FTC fines $2500 for unauthorized credit checks. Many dealers are honest and will photocopy your license on a copier at the front desk and give it right back. But some, while you’re out on the test drive, run a credit check on you. Then they give your info to local banks, who run credit checks. Now you have 5-6 credit checks on your record. This will haunt you when you buy furniture and apply for credit. You’ll get rejected for 5-6 checks on your credit with no credit issued. Don’t give personal info until you have signed the buyer’s order and are doing dealer financing. "
A check is not a form of credit in the sense that we are referring to in this thread. Information regarding your bank accounts will not show up on a credit check.
Some businesses subscribe to third party services that report whether you have been bouncing checks all across town, and may refuse to accept a check from you. But this is something totally unrelated to a credit check.
Before you dismiss the financing deal if the car price is right remember that the “best” deal isn’t all that easy to figure out.
If the deal is cash you know your cost immediately.
For a financing deal it gets more complicated. I would do it this way. To find the cost using financing multiply the monthly payment times the number of months in the contract and add the down payment. If you have the money to pay cash you could use that money to earn interest. So you have to subtract the interest you could earn from the cost of the finance deal. If that comes out less than the cash amount you would pay then financing is cheaper. If not, pay cash.
A check can spur a credit check…or a check of prev check paying history. I work at TransUnion, I know what we have on file. If you are handed a check as payment, and it is a personal check, you can go ahead and pull a credit report, because you are issuing the buyer 15,000 bucks in credit when he drives off. Usually, bizs accepting checks will use a company that checks on check paying history…not a credit bureau, but pulling a credit report is not out of the question, especially since car dealers pull so many that they can wipe their asses with them.
Also, while some car dealers are a bit underhanded when it comes to checking credit REPORTS while you are on a test drive, to pull a credit report, one needs only to have ‘permissable purpose’, not PERMISSION.
