Why credit check for a cash sale

[WhyMe]

I have looked at a few new cars in the past. other than my first car in the 80's, i have paid cash for all my cars since.

Every time i have been at a dealer, even though i told them i have no trade and am paying cash they insist on running a credit check. I always reiterate that i am paying cash and not credit, they are insistant about it.

I have never been able to find out what the reason or logic is for this.

there seem to be many knowledgable people here. anyone know why?

 

[JHZR2]

Maybe it is a Washington thing? Ive said the same thing and have never done a credit check.

I think they may want to try to appeal to you with a "better" deal with some low out of pocket amount...

 

[Tegger]

Are you paying with actual currency, or with a check?

I found this interesting link on the subject:
http://www.yelp.com/topic/dublin-when-bu...o-be-filled-out

 

[apwillard1986]

We do it at our dealership. There have been a few threads on this subject in the past. We do it because we have to run your info. against the OFAC list. The easiest and quickest way is to pull a bureau. It is not the only option but it is what we are best equipped for. There is nothing sinister about it, at least not at my store. The system we use is called Dealertrack. It is the same system we use to pull credit for a purchase. Most dealers are like us primarily because the OFAC check functionality is included in the Dealertrack program we already own. Like any business, redundancy gets expensive.

 

[SwampSurvivor]

I tried to buy a Grand Marquis with cash. The dealer told me I wasn't able to and that I had to finance.

I ended up going elsewhere.

 

[apwillard1986]

Originally Posted By: Miller88
I tried to buy a Grand Marquis with cash. The dealer told me I wasn't able to and that I had to finance.

I ended up going elsewhere.


As you should have. You don’t have to finance anything.

On that same note. Never let a dealer tell you that your loan approval or interest rate is predicated on your purchase of a warranty etc. Products like warrantees are in many cases great products and for many they are a good value. However, under no circumstances can your loan approval or rate be effected by the decision to purchase one or not.

We hear horror stories about people getting sucked into this all the time.

 

[Donald]

The two things that would annoy me would be 1) the extent to which the dealership handled privacy, there have been cases in the past where the dealers would just dump the paper in the trash when done and 2) whether or not it shows up in a credit report as a real inquiry and counts negative for FICO.

If you actually apply for credit, they run your credit and that counts as a credit inquiry and hurts the FICO score. Others may have a permissible reason even if you do not actually apply for credit and those do not count in the FICO and you are the only one to seem them. They do not appear to anyone else who pulls your credit.

 

[rjundi]

The reason is you are giving them a lot of information about yourself.

They can check your credit and size you up in the sale and potential of making money or upselling you. They don't make as much money selling a car cash to you. Financing manager makes the dealer a lot of mone.y

 

[rshaw125]

I have had dealers tell me a lot of things. I am the customer and I decide. Last time I bought a car I paid cash had my license and insurance as required by law here. Take it or keep the car.

 

[Gabe]

I didn't get a credit check when I bought my Subaru.

The dealership had a hard time verifying my check, so I had to wait a few days for them to get everything worked out. Also, they wouldn't allow my to use my credit card - I wanted the cash back - which I thought was a violation of some law.

 

[apwillard1986]

You are right. The dealership is not a non-profit organization. The finance manager does make the store money. Just as you make the company you work for money. Perhaps I am jaded as I work at one but I also hope that an alternate perspective might be appreciated. If you imagine that we pull credit to scrutinize the type of person you are so as to find the most effective means with which to wring the money out of you, you are more deviously minded than most car salesmen. Either that or the car business myth is far more alluring to the public than the car business fact.

I understand the frustration. We as a society are asked to furnish more information to prove we are who we say we are all of the time. Add to that identity theft and the fact that the sale of such information is a multi-billion dollar industry and you have a recipe for mistrust and frustration. The dealer is required to run an OFAC. If you are uncomfortable with allowing them to do it in the easiest manner available to them then tell them so. Google the alternatives and go in armed with info. Then be patient while they call in the check. If they refuse then leave and go somewhere that will. We have processed the OFAC by alternate means for customers that were adamant. Most customers however understand once it is explained and acquiesce. If you are worried this is a house of mirrors someone is building to trap you then agree to a drive-out price before you let them run it. In this way you can be assured that it didn’t cost you anything.

As to privacy concerns, they are required to furnish you with a copy of their privacy policy which you must sign before they can legally run information. In that policy they will explain what they do and do not do with info. Scratch thru any reference to releasing the info. for the purpose of securing financing and make sure it states they don’t sell information to 3rd parties.

 

[apwillard1986]

It is at the dealer’s discretion to take credit cards or not. We don’t accept them for down payment or purchase either. It only takes one customer calling and canceling the charge after you have both signed legal documents stating they own the car for you to put that policy on the books. A dealer that does take them just hasn’t had it happen yet.

Again I am just giving you the view from the other side of the fence.

 

[daman]

Pay cash all the time never that problem here...

 

[fsskier]

I have never financed a car..... when asked to fill out credit information I flat refuse, and offer to happily leave if it is an issue. You can go with me to the bank to verify the checking balance will cover it if you wish, otherwise no other information.

Honestly, in two seconds they can type your name and address in and have your credit score immediately, so anything more than that is manipulative.

Some dealers are more cooperative..... when I bought my Sienna I dealt over the computer, my daughter drove the check over and signed my name..... my neighbor picked it up when it came in. I never actually went there!

 

[rjundi]

Originally Posted By: apwillard1986
Originally Posted By: Miller88
I tried to buy a Grand Marquis with cash. The dealer told me I wasn't able to and that I had to finance.

I ended up going elsewhere.


As you should have. You don’t have to finance anything.

On that same note. Never let a dealer tell you that your loan approval or interest rate is predicated on your purchase of a warranty etc. Products like warrantees are in many cases great products and for many they are a good value. However, under no circumstances can your loan approval or rate be effected by the decision to purchase one or not.

We hear horror stories about people getting sucked into this all the time.


I lie through my teeth about buying these add-ons to help purchase price lower. And then my wife comes in with check from credit union for purchase price without add-ons. She makes sure to bring our young kids to make it painful on the dealer end and they have sold the vehicles in a huff to us at invoice or below.

 

[javacontour]

I suspect below 10K and nothing needs to be reported. Once you exceed the 10K threshold, things such as the OFAC come into play.

If you walk in with 40K cash or a cashiers check, it's going to set off some alarms since most folks don't do that.

 

[ctrcbob]

Went to buy a car. Made the deal. It was understood that I was paying cash. This was a Tuesday. Gave the dealer a downpayment by check. Told him that I would return on friday with the rest, as I had to make a phone call to my SIP for the money. Dealer says, "take the car today". I don't want it today, but will be back friday with the money. "Take the car today, we will make out a promissory note, so you can take the car today". OK, I go and phone for the money to be deposited to my bank. Return to the salesperson, who is making out forms for Ford Credit. Told him I'm not signing that. He gets his manager who says, "well its the same thing as a promissory note. I told him that I know what a promissory note is, and I will not sign a credit application. He asked "what happens if we can sell the car for more before you return on friday"? I told him thats tough. He would not hold the car for me, even though I gave him a deposit check. Lucky for me, all the other paperwork was right there in front of me, so I took it, removed my deposit check, and told him that "I am no longer interested in the car". Then I got back on the phone and cancelled the SIP money. Dealer then says that once the money comes in, to return and he will sell me the car. Again, I told him "I was no longer interested in the car". Dealer phoned me again while I was on the road back home. Again that evening, again the next morning. Told him that he had his chance and that "I was no longer interested in the car".

Have never gone back to that dealer.

As for paying cash (check) my SHO was paid that way, and the dealer did not ask for anything. Gave him the money (checks) and away I went. The regestration and title did not come until after the checks cleared. No problem.

 

[javacontour]

I've heard they can't refuse the transaction based on a small amount. I.E. if I wanted to use my Discover Card to by a candy bar, technically, I'm supposed to be able to do that.

I suspect (and our resident Finance Manager will chime in) that the New or Used Car sales don't take credit cards. I've left a deposit on my card and it seems they have to run to the service department to run the card for the deposit.

So technically, the car dealership isn't in violation because they don't take cards. The service department does. But they are not going to take $40K on your Amex Black card. Not unless you are willing to pay the 3%+ in processing fees.

Originally Posted By: Gabe
I didn't get a credit check when I bought my Subaru.

The dealership had a hard time verifying my check, so I had to wait a few days for them to get everything worked out. Also, they wouldn't allow my to use my credit card - I wanted the cash back - which I thought was a violation of some law.

 

[spackard]

So, Hertz rental takes credit cards until the sun goes down, but Hertz car sales says won't accept a credit card for payment of car.

http://www.hertzcarsales.com/content/faq.aspx#faq15

Well, someone somewhere has to have phoned up and disputed their rental car charge. Probably happens dozens of times a year. (Same for airlines, probably much worse.)

Probably not doing it for your benefit. Maybe the amount of the loss, or, maybe in the past it was abused until the business model changed.

 

[apwillard1986]

If you are referring to me as the “resident Finance Manager” I have to tell you I am not. I am the Technical Services and Inventory Manager for my hometown Chevy store. I have just been around all this for a long time and I am always learning so I try to share some well-intentioned advice when I can.

I don’t know if they can’t refuse based on a small amount but I hope that is the case because the corner store by my house always refuses my card for the smaller purchases and it is frustrating…

You are correct in that it is just the sales departments that don’t take them. Parts and Service do of course. We have the ability to process cards in sales and will even take deposits to hold cars for folks on a credit card. We just don’t allow any of the money used toward the purchase to be charged on a card. For us, it isn’t even the processing fee we worry about. It is the simplicity of being released from a charge on some cards. If you put $500.00 down on your AMEX and leave and call them up and dispute the charge we now have a huge headache. You have paperwork saying you own the car and a receipt stating you provided the agreed amount in down payment. Now, your card company is calling saying they wont fund the charge and it starts a long and tedious process.