After a prolonged recession with the years of tight credit, auto loans /financing for new and used car shoppers is extensive. Credit restrictions have eased and interest rates are still historic lows.
It is a very attractive market right now. However, lenders are still more conservative than they were before the recession, which started in 2008. Despite this, the automotive sector of the economy is no longer recovering. It has indeed recovered.
The following are some questions you may ask:
1. Why is the salesman eager to get me to fill out a credit application?
The dealership uses the credit report as a tool to increase sales and a way to protect itself from undesirable or even fraudulent shoppers, according to auto financing and car-selling experts.
Another reason dealers like to get the credit application filled out early, because, it is a rapport builder for the salesman. If the customer agrees to provide information for the credit report, this is the chance for the salesman to earn the customer’s trust.
2. What information does my credit report contain and what does the dealership do with that information?
A person’s credit report shows two things that are essential to getting a good car loan:
- The report shows your financial history. It is a record of our ability to borrow money and repay it on time.
- The credit bureau combines all factors in your credit history into one numeric score commonly referred to as FICO score. The dealer will use that score as it contacts different lenders to determine if they will give you a loan at what interest rate.
3. I’m paying cash. So why is the dealer asking to pull my credit report?
Federal consumer protection and national security laws require that dealers verify the identity of the buyers. The Patriot Act has requirements meant to counteract terrorist who might use car buying to launder money.
4. Can the dealer run my credit without may knowledge?
It’s not supposed to. The dealer is required to get your permission to run a credit report. Usually, the salesman will ask you to sign credit application.
5. Is there any risk to having a dealer check my credit history?
It isn’t a good idea to divulge personal information unless it’s necessary. So despite his explanation of why dealerships do what they do, only allow them to run your credit when you are certain that you are really interested in buying a car.
6. Is there anything I need to do concerning my credit before I go car shopping?
Check you credit report yourself. This is the most recommended piece of advice by both dealership representatives and consumer advocates. Resolving these problems ahead of time could raise your credit score and give you access to a wider range of finance options.
Going into a car transaction armed with necessary information, and knowing what your credit report says, will show the dealer that you are knowledgeable. That knowledge could help you avoid mistakes and save a lot of money in the long run.