Dealer wants me to fill out the credit application
Member
Joined: Oct 2019
Posts: 107
Likes: 53
From: El Paso Texas
S550 4Matic
It seems you’ve worked in some poorly run financial institutions. That’s is unfortunate and not reflect of all, as in my 30+ years in banking, my experience is 180 degrees out from yours.
Back on topic, do not complete a credit application at the dealership, unless you want them to pull your credit.
Now, they may be able to get you a better, or equal, rate than your credit union, so you may win on the loan front. Heck, they may even get you the loan through your preferred credit union. Even your credit union will pay them for the loan if you go through the dealer.
Their lender will pay them a fee equal; to 1%, or more, of the loan amount. I always try to get additional.price concessions from the dealership if I am going to finance through their office, because I know the lender is paying them to get the loan. I don’t want it all. I just want them to split it with me, either as a price reduction, or as a credit toward parts/accessories/service, etc.
Back on topic, do not complete a credit application at the dealership, unless you want them to pull your credit.
Now, they may be able to get you a better, or equal, rate than your credit union, so you may win on the loan front. Heck, they may even get you the loan through your preferred credit union. Even your credit union will pay them for the loan if you go through the dealer.
Their lender will pay them a fee equal; to 1%, or more, of the loan amount. I always try to get additional.price concessions from the dealership if I am going to finance through their office, because I know the lender is paying them to get the loan. I don’t want it all. I just want them to split it with me, either as a price reduction, or as a credit toward parts/accessories/service, etc.
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Joined: Oct 2002
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From: Cincinnati
2010 E350 4Matic
Their lender will pay them a fee equal; to 1%, or more, of the loan amount. I always try to get additional.price concessions from the dealership if I am going to finance through their office, because I know the lender is paying them to get the loan. I don’t want it all. I just want them to split it with me, either as a price reduction, or as a credit toward parts/accessories/service, etc.
Good info. I've seen that you never want to tell them that you are a cash buyer up front for this reason. Which stupidly I have nearly always done.
1 % of a $100K is worth something. That might even buy a glass of wine on the yacht that my son works on.
Last edited by MBNUT1; Dec 11, 2020 at 04:38 PM.
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From: Maryland
2024 S580
Just following up on this:
https://www.creditcards.com/credit-c...auto-car-loan/
You go to buy a car. You have cash or financing in hand, but the dealer says, “Sorry, federal law requires a credit check. The Patriot Act, you know.”
Don’t fall for it. That’s a phony excuse to try to size you up, creditwise, and make an extra buck off you. Unless you decide to finance through the dealer, getting your credit pulled will do just one thing: drive down your credit score.
Under the Fair Credit Reporting Act, a car dealer may pull your credit – if you consent by filling out and signing a loan application. However, when paying with cash or prearranged financing, a dealer has no right to coerce you to agree to a credit check by invoking the USA Patriot Act, the 2001 federal anti-terrorism law.
Yet, it happens. Wanda Dunbar, 70, and her husband went to buy a new car from a dealer near Palm Springs, California. The couple planned to pay cash, but the dealer told them the Patriot Act required him to run a credit check.
“The dealer said he had to make sure that we were who we said we were and that we weren’t terrorists,” she says.
The dealer said he had to make sure that we were who we said we were and that we weren’t terrorists.
Wanda Dunbar
Acting as a financing middleman is one of the top ways dealers make money, says Randy Henrick, a private consultant and president of AutoDealerCompliance.net. So even if you walk into the dealership with a wad of cash or a preapproved auto loan you got on your own, the dealer has a financial incentive to persuade you to change your mind and apply for a loan affiliated with his dealership.
Most dealers’ salespeople follow the rules, while trying their best to make a sale. They’ll ask a customer to fill out a credit application, but if the prospective buyer declines, the salesperson just moves on and tries other means to make the sale profitable. Floor mats? Undercoating?
Shady dealers, though, ramp up the pressure and invoke the Patriot Act. And many fall for the ploy. “Most people have no idea what’s in the Patriot Act,” Henrick says.
Unethical salespeople take advantage of that lack of knowledge to conduct an illegal credit check. When you give over your driver’s license for a test drive, the information on the license is all they need to run your credit.
“What a lot of dealers do is pull a credit report while a customer is out for a test drive and then try to undercut the financing the customer got from a credit union or bank,” Henrick says.
For example, Hendrick says, car dealers must check all car buyers against the U.S. Department of Treasury Office of Foreign Assets Control list of specially designated nationals and blocked persons. The Patriot Act clarified this requirement, adding auto dealers to the list of businesses that must conduct a check.
What a lot of dealers do is pull a credit report while a customer is out for a test drive and then try to undercut the financing the customer got from a credit union or a bank.
Randy Henrick
“The OFAC list is generally people who are sympathetic with or involved with foreign terrorist groups,” Henrick says, adding that no one in the United States is supposed to make a sale to anyone on the list.
“You literally cannot sell a pack of gum to somebody on the list, though in the real world the guy at the candy store doesn’t check,” he says.
A car dealer starts by simply running your name through the OFAC list, usually using specialized software. If the dealer gets a hit, they go through seven steps to try to verify the match, Henrick says.
“You don’t need a Social Security number,” says Jeff Ostroff, CEO of CarBuyingTips.com. “All you have to do is bounce the name off that list. It’s something you can do in five seconds.”
Another federal law requires car dealers and other businesses to fill out IRS Form 8300 if they receive a cash payment of $10,000 or more from a customer, Henrick says.
They should also fill out the form for lower cash payments if they spot red flags suggesting the money came from drug sales, money laundering or other illegal activity.
None of these regulations requires a credit check. “If you’re not financing a car, there’s no reason for them to check your credit,” Ostroff says.
https://www.creditcards.com/credit-c...auto-car-loan/
Buying a car? Don’t fall for the Patriot Act credit check scam
Shady car dealers invoke anti-terror law, run unnecessary credit checks to sell you on dealer financingYou go to buy a car. You have cash or financing in hand, but the dealer says, “Sorry, federal law requires a credit check. The Patriot Act, you know.”
Don’t fall for it. That’s a phony excuse to try to size you up, creditwise, and make an extra buck off you. Unless you decide to finance through the dealer, getting your credit pulled will do just one thing: drive down your credit score.
Under the Fair Credit Reporting Act, a car dealer may pull your credit – if you consent by filling out and signing a loan application. However, when paying with cash or prearranged financing, a dealer has no right to coerce you to agree to a credit check by invoking the USA Patriot Act, the 2001 federal anti-terrorism law.
Yet, it happens. Wanda Dunbar, 70, and her husband went to buy a new car from a dealer near Palm Springs, California. The couple planned to pay cash, but the dealer told them the Patriot Act required him to run a credit check.
“The dealer said he had to make sure that we were who we said we were and that we weren’t terrorists,” she says.
The Patriot Act and credit checks
If you truly want a loan from a car dealership, applying is straightforward: You fill out a credit application, the dealer runs your credit and shops around for a loan. If you get approved, you sign on the dotted line and the dealer makes a commission from the lender. In many cases, dealers mark up the interest rates on loans and split the proceeds with the lender.The dealer said he had to make sure that we were who we said we were and that we weren’t terrorists.
Wanda Dunbar
Acting as a financing middleman is one of the top ways dealers make money, says Randy Henrick, a private consultant and president of AutoDealerCompliance.net. So even if you walk into the dealership with a wad of cash or a preapproved auto loan you got on your own, the dealer has a financial incentive to persuade you to change your mind and apply for a loan affiliated with his dealership.
Most dealers’ salespeople follow the rules, while trying their best to make a sale. They’ll ask a customer to fill out a credit application, but if the prospective buyer declines, the salesperson just moves on and tries other means to make the sale profitable. Floor mats? Undercoating?
Shady dealers, though, ramp up the pressure and invoke the Patriot Act. And many fall for the ploy. “Most people have no idea what’s in the Patriot Act,” Henrick says.
Unethical salespeople take advantage of that lack of knowledge to conduct an illegal credit check. When you give over your driver’s license for a test drive, the information on the license is all they need to run your credit.
“What a lot of dealers do is pull a credit report while a customer is out for a test drive and then try to undercut the financing the customer got from a credit union or bank,” Henrick says.
Some basis in reality: Car dealers check for terrorists
Auto dealers also might mention the Patriot Act to customers because federal law does require dealers to take measures to fight terrorism and other crime.For example, Hendrick says, car dealers must check all car buyers against the U.S. Department of Treasury Office of Foreign Assets Control list of specially designated nationals and blocked persons. The Patriot Act clarified this requirement, adding auto dealers to the list of businesses that must conduct a check.
What a lot of dealers do is pull a credit report while a customer is out for a test drive and then try to undercut the financing the customer got from a credit union or a bank.
Randy Henrick
“The OFAC list is generally people who are sympathetic with or involved with foreign terrorist groups,” Henrick says, adding that no one in the United States is supposed to make a sale to anyone on the list.
“You literally cannot sell a pack of gum to somebody on the list, though in the real world the guy at the candy store doesn’t check,” he says.
A car dealer starts by simply running your name through the OFAC list, usually using specialized software. If the dealer gets a hit, they go through seven steps to try to verify the match, Henrick says.
“You don’t need a Social Security number,” says Jeff Ostroff, CEO of CarBuyingTips.com. “All you have to do is bounce the name off that list. It’s something you can do in five seconds.”
Another federal law requires car dealers and other businesses to fill out IRS Form 8300 if they receive a cash payment of $10,000 or more from a customer, Henrick says.
They should also fill out the form for lower cash payments if they spot red flags suggesting the money came from drug sales, money laundering or other illegal activity.
None of these regulations requires a credit check. “If you’re not financing a car, there’s no reason for them to check your credit,” Ostroff says.
Senior Member
Joined: Jul 2017
Posts: 382
Likes: 127
E55
I have encountered this at every car purchase I have made since I pay cash....or used to.
I had the exact question and no the dealer wouldn't fold when I walked, I did unfortunately as it was a one off build car. I did the usual research online and there is enough material to read for a year. There are also some interesting You Tube videos that that are presented by ex sales people that explain exactly why this is done and why the worst thing you can do is say your paying cash.
Basically what you should do is lie and say you are financing and getting all there BS add ons and then after you negotiate the actual cost of the actual car tell them your paying cash and only want the car. Idea is they are willing to move on car price as they make more on the add ons and financing anyway.
Maybe its coincidence but they did seam to treat me a lot better when I wasn't paying cash. Pay it off at first payment what is the difference anyway there is no prestige in paying cash as who cares what the sales person thinks of you.
I had the exact question and no the dealer wouldn't fold when I walked, I did unfortunately as it was a one off build car. I did the usual research online and there is enough material to read for a year. There are also some interesting You Tube videos that that are presented by ex sales people that explain exactly why this is done and why the worst thing you can do is say your paying cash.
Basically what you should do is lie and say you are financing and getting all there BS add ons and then after you negotiate the actual cost of the actual car tell them your paying cash and only want the car. Idea is they are willing to move on car price as they make more on the add ons and financing anyway.
Maybe its coincidence but they did seam to treat me a lot better when I wasn't paying cash. Pay it off at first payment what is the difference anyway there is no prestige in paying cash as who cares what the sales person thinks of you.
Member
Joined: Dec 2020
Posts: 159
Likes: 91
From: NORTHERN NJ
2018 S560 4matic Sedan. Official member of the 18" RIM CREW.
Yep, that's exactly what I did. I basically told the salesperson that I was happy to pay cash, but would take a loan to get the deal I wanted. I ended up getting that deal, along with a bonus $1500 credit from MBFS ... and then I immediately paid it off before I ever had to make a payment. Win win.
