A Few Things You Should Know About Auto Dealers And Credit Reports
If you are thinking about buying a new car, you may be wondering if your credit is good enough to obtain a loan. It is a good idea to obtain a copy of your credit report before going out shopping. Make sure the report is accurate and if possible, find ways to clean it up a bit. While looking it over, there are a few things you need to know when it comes to auto dealers and credit reports.
The first thing you should know is that many dealers do not use your normal credit report score to determine financing. They use what is called an "industry" report. While all of your credit information is there, this report puts extra emphasis on your previous dealings with auto loans. Even if your regular credit score is high, if you haven't taken out a car loan in a number of years, your score for the auto loan will be lower. Do not be surprised by this fact. While you will probably still get the loan, it may be at a higher interest rate.
Running Your Report
Many dealers will try to get you to fill out a credit application as soon as you show any interest in a car. Some will try to convince you your credit report must be looked at before you can test drive a vehicle. This is not completely true. While it may be a dealership practice, there is no law about this. You can refuse to give your information until you have found the vehicle you want to buy. This will keep from having your credit checked too often if you go to other dealerships in your search. If it is a dealership policy, you may still be able to go for a test drive if you have the sales person in the vehicle with you. You should also know that your credit will need to be checked even if you are going to be paying cash for the car; this is to be sure you are who you say you are and that you are not involved in identity theft.
While you can buy a vehicle from a private seller without the need for a credit report or auto loan, at some point you may want to have a newer car, with some type of warranty. If your credit is good enough, start out going for a small car loan from your bank for a private purchase. Keep the loan for a while and then pay it off if you wish. This way, when it comes time to go through a dealership, you will have some type of industry credit in your favor. For more information about car dealer credit reports, contact a lender or dealership.