SANTA MONICA, CA--March 18, 2013: Extraneous credit checks could put an unnecessary dent in a credit score. That's why Edmunds.com advises car buyers to know when they should and should not grant car dealers permission to run a credit check.
“But if you are using outside financing from your bank or credit union, the dealer is not required to run your credit report.”
"Dealerships usually offer access to the best finance rates for qualified buyers, and to get those rates, a credit report is required," says Edmunds.com Sr. Consumer Advice Editor Philip Reed. "But if you are using outside financing from your bank or credit union, the dealer is not required to run your credit report."
Car buyers can understand their rights and protect their credit scores by following a few helpful guidelines:
- Shop around for a loan from an independent source such as a bank, credit union or online lender before going to the dealership so that you know the rate you qualify for before learning what a dealer can offer you.
- At the car dealership, tell the salesperson you are a "cash buyer" (because you have pre-approved financing). But in the finance and insurance office, consider any offers that may beat the interest rate on the loan you already have.
- Only give the car salesperson permission to run your credit if you decide to finance at that dealership.
Edmunds.com also reports that there is some confusion among dealers themselves about whether the Patriot Act requires them to run credit reports in connection with car sales. It does not. The Office of Foreign Assets Control (OFAC) does require dealers to screen buyers who are making purchases of $10,000 or more in cash to make sure they are not on a government terrorism watch list. To comply, buyers must provide dealers with their name, address, date of birth, Social Security or other tax ID number, a valid driver's license and occupation. But no credit-reporting agencies are involved.
Edmunds.com has more details on credit check do's and don'ts at Credit Reporting Scams .
Another advantage to securing outside financing is that buyers are less likely to fall prey to spot delivery and "yo-yo financing" scams. Edmunds.com helps buyers identify and protect themselves against these situations at Delivery Scams .