I have financing lined up, but the dealer wants to run credit app?

[pizzadude]

I still don't get why showing two forms of ID doesn't establish your identity at a car dealership but works everywhere else. I'd be happy to show them my DL ( proof of identity ) and Passport ( proof of citizenship ) so that they can accept a certified check from a financial institution on my behalf that has already also previously verified my identity through the loan approval process.

[FrugalRican]

I was going to say, the Patriot Act has NOTHING to do with credit history and using that as means for verification.

I work at a bank and we have a separate program for OFAC searches that is completely different from running credit reports and ChexSystems.

Sorry, but my credit does NOT need to be pulled to verify that I am a US Citizen with no tags for being a possible foreign terrorist.

When we open accounts here, we require two forms of ID, we run ChexSystems and we run a seperate program that complies with the Patriot Act, and none of those three things require a hard pull or even a soft pull on someone's credit.

They are not the same.

[Hammer23]

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@Anonymous wrote:

This is rather irritating. I applied for a loan through my local CU, to purchase a pre owned vehicle. Long story short the deal fell through and I am still shopping. I found another car tonight that I want to purchase. After we agreed on the price, I told the salesman I already had a loan approved through my CU. He said in order to buy the car I need to fill out a credit app. He said the owners of the dealership require this. I don't want any unnecessary inquires on my file. He stated that it would just show up as the name of the dealership. What is going to make my blood boil, is if I give them the info and they shop a bunch of loans. Im buying an older vehicle, and I doubt they can beat the rate I have. I feel confident enough that I don't even want them to try. Is this legit? Is there anyway I can authorize just one pull, or will they have free reign to submit my file to a bunch of banks?

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There is a rule auto dealers must follow called the "red flags rule". It states that a dealer must check to make sure you do not appear on a terror watch list, money laundering watch list, OFAC, and others. This is normally cleared through a credit pull, however in the case of a cash buyer, many dealerships have a way to run your information through without a HP. I would say if you are concerned about the INQ, tell the dealer you will walk. 

[Watchmann]

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@pipeguy wrote:

Please provide a link to the section or act of law you are talking about. I can't find anything in the Patriot Act that requires a car dealer to run a credit report as "verification of Identtification".

http://www.fincen.gov/statutes_regs/patriot/index.html

Section 326: Verification of Identification

http://www.gfsbusiness.com/docs/USA_PATRIOT_Act_Section_326_Final_Rule.pdf

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I didn't say that a dealer has to run a credit report on you, only that he CAN run one.  Look at it from his standpoint, he's running a business and has standard procedures to comply with the law, and here comes an individual who wants to pay cash but doesn't want to work with the dealer on compliance in the dealer's normal course of business.  Some dealers might be persuaded to use a different system if they are familiar with it, others won't.  If you don't like it then walk.  But the effect of a single inquiry is not going to kill anyone's score for more than a short time and getting all twisted about it is overkill, imo. 

[pipeguy]

Even though the OP has said the deal is over anyway (seems the dealer was less than honest over the condition of the car, go figure). I stand by what I originally posted. If I was a cash buyer, which would include being pre-approved by a lender other than the dealer, I would NOT allow the dealer to run my credit. If the dealer said to me its because of the Patriot Act or "our owner requires it", I'd walk. I might even look at the salesman and say "did you think that up all by yourself or did your manager tell you to pass on that BS?"

I don't mind the dealer making a fair profit nor do I mind the series of hard pulls if its to my advantage. What I don't like is being lied to because it taints the complete transaction in as how can I believe ANYTHING this salesman or dealer says after that? There is always another car and I'm sure there is always another car dealer that'll lie to me, my choice is not to deal with that kind of dealer.

[UpNComing]

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@pizzadude wrote:

I have also heard some dealers claim that they have to run your credit on cash sales to verify your identity as required via the patriot act. Personally I don't think it is necessary, there are many ways to prove who you are without running credit.

+1 to pipeguy's advice ~ be prepared to walk out. If they happen to change their mind be sure to write in "dealer agrees not to run credit" on the sales contract.

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This is untrue.

[Anonymous]

As a car sales professional, I will tell you that any purchase over $9,999 a dealer is required to run the information on a credit app through OFAC(at least in cali). Pulling the credit does 2 things 1.) clear the OFAC requirement (buy seeing if their are any red flags and by asking out of wallet questions) and 2.) gives the dealership the ability to shop the rate. Now where as I can understand the adverse reaction to the hard pull I can honestly say that the majority of customers that I have had come in with financing already arranged have found we can find them a better rate. Good luck finding a credit union that will do 0% for 60 months. And as to somebody saying that the dealer makes most of its money in the financing, that is incorrect. Especially in California, there are strict regulations regarding how much a dealer can profit from the financing of a vehicle.

But worst case just tell them you will only let them run the OFAC and you dont authorize a hard pull. DONT SIGN THE CREDIT APP!!! fill it out but do not sign it. and tell them if they run it you will go to the DMV. they should back off at that point

[Anonymous]

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@Anonymous wrote:

As a car sales professional, I will tell you that any purchase over $9,999 a dealer is required to run the information on a credit app through OFAC(at least in cali). Pulling the credit does 2 things 1.) clear the OFAC requirement (buy seeing if their are any red flags and by asking out of wallet questions) and 2.) gives the dealership the ability to shop the rate. Now where as I can understand the adverse reaction to the hard pull I can honestly say that the majority of customers that I have had come in with financing already arranged have found we can find them a better rate. Good luck finding a credit union that will do 0% for 60 months. And as to somebody saying that the dealer makes most of its money in the financing, that is incorrect. Especially in California, there are strict regulations regarding how much a dealer can profit from the financing of a vehicle.

But worst case just tell them you will only let them run the OFAC and you dont authorize a hard pull. DONT SIGN THE CREDIT APP!!! fill it out but do not sign it. and tell them if they run it you will go to the DMV. they should back off at that point

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This is completely wrong, regardless of what your bosses tell you.  Show me the law (national or CA) that says a car dealership must run a credit check before selling a car.  Link to it.

Also, regarding financing, they may not make most of their money, but they make plenty of profit on it, all over the country.  Also, my CU may not be able to offer me 0% for 60 months, but that often isn't the best way to go.  Many manufacturers will offer 0% OR cash back.  More often, if you take the cash back and a low interest rate from your CU (let's say 2.49% like mine) you will pay less in the long run.  Sometimes you won't, but you just need to do the math to figure it out.

Either way, it is absolutely incorrect that a credit check is required to verify your identity.  I don't doubt for a second that many salesman believe this to be true, but that doesn't make it true.  There is no such legal requirement.  There are a ton of ways to verify someone's identity without a credit app and they are done every day by banks opening new accounts who must meet the same Patriot Act requirements.

[Anonymous]

I understand everybody's concern about having their credit ran.  If you would like to know why an OFAC check or Hard Pull is needed consult with the Department of Motor Vehicles and ask about their ITTP Red Flag programs that a dealer MUST COMPLY WITH.  If the dealer doesn't comply with applicable state laws they are subject to fines and or imprisonment.  Think of this:  a random dealership is taking a personal check from somebody or a 3rd party check from a Loan Company, etc... the dealership you're at wants to know if you're creditworthy of giving them the check and taking the vehicle at that point (most cars are 15k to 50k.  You have to understand the exposure any dealership would have to a fraudulent transaction resulting in a stolen vehicle which may be recovered in pieces and not paid for.  Secondly, any transaction above $9999.00 must be reported to the IRS (Internal Revenue Service),  A hard inquiry pull is necessary most of the time for a dealership to make a satisfactory decision on whether or not to let a car roll off their lot.  Checks take 48-72 hours to clear so it is risky.  Cash is King but we must make sure we report it to the IRS and you're not a terrorist!  If you cannot understand these instances then go buy a car off the street from a private seller.  As a prior salesman and now Finance Manager we run your information to protect you and the dealership.

[0REDSOX7]

Then if that is true, you should only see one HP, not 15 from when you finance managers rate shop.

And don't give the BS that it is only coded as one HP, while yes that is true for scoring purposes, other lenders see all the HPs and often decline for too many inquiries. And by other lenders, I mean for credit cards, etc.