topic Re: Car Dealership Inquiries in General Credit Topics

Car Dealership Inquiries

Anonymous — Mon, 28 Oct 2019 21:37:03 GMT

I bought a new vehicle a few months ago...

Over the weekend I applied for the venture one mile card and was denied, why.....Because too many inquiries.

The dealership ran my credit with 6 different banks and showed me the best option, so frustrated..SO, so frustrated..

Re: Car Dealership Inquiries

OmarGB9 — Mon, 28 Oct 2019 21:39:30 GMT

Yea it sucks that even though FICO sees multiple inquiries within 30 days as one, lenders unfortunately do not. Sorry OP. Perhaps try calling a backdoor number and recon?

Re: Car Dealership Inquiries

FinStar — Thu, 31 Oct 2019 21:25:41 GMT

@OmarGB9 wrote:
Yea it sucks that even though FICO sees multiple inquiries within 30 days as one, lenders unfortunately do not. Sorry OP. Perhaps try calling a backdoor number and recon?

Unfortunately, Capital One does not reconsider system-declined applications.

Sorry to hear about the declined application OP.

Re: Car Dealership Inquiries

Anonymous — Thu, 31 Oct 2019 22:31:03 GMT

This is a practice that really should be illegal honestly. The dealerships are actually shopping for the biggest kickback for themselves more than they are the best rate for you. Hopefully in the future you will get your own financing from a CU lined up and freeze your credit before you go in to actually buy.

Sorry for the denial. The sting should be gone in a year.

Re: Car Dealership Inquiries

Anonymous — Fri, 01 Nov 2019 12:22:36 GMT

FICO does not see multiple car dealership inquiries within 30 days as one. That is incorrect.

Most FICO algorithms have a 45 day de-duplication window. The 98 model uses a 14 day de-duplication window.

Where the 30 day factor comes in is as a buffer. Whenever you do an installment inquiry, it does not actually affect your score for 30 days.

The reason for this is to allow rate shopping without your score dropping for each inquiry WHILE you’re rate shopping. It would be kind of useless if only the first bank got your best score.

Likewise the de-duplication window is to combine them as if they were from rate shopping as well, So that you’re only dinged once for the multiple inquiries within the 14/45 day period.

Yes the practice should be illegal. They’re not looking for the best rate for you, they’re looking for the biggest kickback for them as noted by @Saeren.

That’s why you should always secure financing before you go to the dealership. Take this as a lesson learned.

At this point, the lender computers see the multiple inquiries and deny you. Even though it doesn’t affect your score with multiple dings for each inquiry, the lender’s computer still sees the number of inquiries and automatically denies it. If it were another lender, you could call for reconsideration and point out it was all from one purchase and probably get reconsideration. But as noted, capital one doesn’t do recon, just another good reason that I do not associate with them.

If you’re not going to secure financing before you go to the dealership, then at least pull your scores, find out which algorithm and credit bureau the dealership uses, and then lock the others and inform them they only have permission to pull from the one bureau.

That way at least only one bureau gets banged up. There shouldn’t be an issue since you already know which bureau has your highest score. The only reason they want to use all three is again to try to find the highest kickback for themselves, not for your benefit.

Nevertheless the best option is to secure financing before you go to the dealership so they don’t have the opportunity to bang up any of your files.

Re: Car Dealership Inquiries

JGGM — Fri, 01 Nov 2019 13:47:25 GMT

Regarding the "biggest kickback" comments - you do realize we (dealerships) already know each bank's 'pay plan' right? Meaning if it was only about the dealership's pay - then we'd only use one or two banks.....not 16-20.

Often times - the number of inquiries depends on the credit profile - and not just a score. There is such thing as a 'bad' 740. Some banks view multiple auto loans worse than others, some score inquiries harder than others, some times the LTV is high (think rolling negative equity into a new deal), etc. There's any number of reasons.

I'm not saying some dealerships do not work the way you suggested, but I do think it's a misrepresentation to say the only reason for the inquiries is to pad the dealer's bank account - if this was the case, you'd have one (maybe 2) inquiries. Also most states have laws that limit rate markup, etc.

At any rate, if inquiries is you're primary concern, just do as other people suggested and arrange your financing before you walk in to the dealership.

Re: Car Dealership Inquiries

The_Rooster — Fri, 01 Nov 2019 14:42:14 GMT

@Anonymous wrote:
This is a practice that really should be illegal honestly. The dealerships are actually shopping for the biggest kickback for themselves more than they are the best rate for you. Hopefully in the future you will get your own financing from a CU lined up and freeze your credit before you go in to actually buy.

Sorry for the denial. The sting should be gone in a year.

This is NOT accurate.

I was an F&I Manager in large Dealership for many years.

Dealerships use a system called DealerTrack (or RouteOne) to shop several lenders for the best rate.

There are no "kickbacks" in dealer lending. Some lenders will allow a dealer to hold a point or two, but thats about it.

The majority o the time, we were simply trying to find the best possibel rate for the customer. If they only submit you to one lender, you may walk away with an APR signficantly higher than if they submitted to multiple lenders and let them duke it out.

Re: Car Dealership Inquiries

The_Rooster — Fri, 01 Nov 2019 14:44:21 GMT

@JGGM wrote:
Regarding the "biggest kickback" comments - you do realize we (dealerships) already know each bank's 'pay plan' right? Meaning if it was only about the dealership's pay - then we'd only use one or two banks.....not 16-20.

Often times - the number of inquiries depends on the credit profile - and not just a score. There is such thing as a 'bad' 740. Some banks view multiple auto loans worse than others, some score inquiries harder than others, some times the LTV is high (think rolling negative equity into a new deal), etc. There's any number of reasons.

I'm not saying some dealerships do not work the way you suggested, but I do think it's a misrepresentation to say the only reason for the inquiries is to pad the dealer's bank account - if this was the case, you'd have one (maybe 2) inquiries. Also most states have laws that limit rate markup, etc.

At any rate, if inquiries is you're primary concern, just do as other people suggested and arrange your financing before you walk in to the dealership.

Exactly.

The misinformation on this forum regarding dealerships is mind-boggling.

I would NEVER hurt someone's credit just to get a "kickback" (i'm laughing while saying that).

Re: Car Dealership Inquiries

The_Rooster — Fri, 01 Nov 2019 14:51:43 GMT

@Anonymous wrote:

If you’re not going to secure financing before you go to the dealership, then at least pull your scores, find out which algorithm and credit bureau the dealership uses, and then lock the others and inform them they only have permission to pull from the one bureau.

That way at least only one bureau gets banged up. There shouldn’t be an issue since you already know which bureau has your highest score. The only reason they want to use all three is again to try to find the highest kickback for themselves, not for your benefit.

It has nothing to do with the algorithm or bureau that the dealership uses.

It has to do with what algo and bureau the LENDERS use when the dealer submits your file.

If you lock 2 of 3 bureau's, the Dealer will simply get errors instead of Approvals for you, for any of the lenders that use the 2 bureau's you locked.

Re: Car Dealership Inquiries

Brian_Earl_Spilner — Fri, 01 Nov 2019 14:56:06 GMT

I don't understand how you got denied over 6 inquiries. What other reasons were given? And I'm gonna assume you mean 6 inquiries on one report.

Re: Car Dealership Inquiries

Anonymous — Fri, 01 Nov 2019 15:57:43 GMT

@JGGM wrote:
Regarding the "biggest kickback" comments - you do realize we (dealerships) already know each bank's 'pay plan' right? Meaning if it was only about the dealership's pay - then we'd only use one or two banks.....not 16-20.

Often times - the number of inquiries depends on the credit profile - and not just a score. There is such thing as a 'bad' 740. Some banks view multiple auto loans worse than others, some score inquiries harder than others, some times the LTV is high (think rolling negative equity into a new deal), etc. There's any number of reasons.

I'm not saying some dealerships do not work the way you suggested, but I do think it's a misrepresentation to say the only reason for the inquiries is to pad the dealer's bank account - if this was the case, you'd have one (maybe 2) inquiries. Also most states have laws that limit rate markup, etc.

At any rate, if inquiries is you're primary concern, just do as other people suggested and arrange your financing before you walk in to the dealership.

Dealers make most of their profit from financing, that says it all.

All it takes is a Google search for "do car dealerships get kickbacks from banks?" to get the truth. If it wasn't a thing, it wouldn't be so high in search terms.

Dealer commission comes from the finance reserve which is a percentage in extra financing costs that you can tack on to a customer's APR quote to turn a profit. It stands to reason then that you would want to secure the lowest APR possible for the customer so that they don't balk when you give them the adjusted figure and then try to sell them on service plans and extended warranties.

Everyone should get their own financing before they go to the dealership if they don't want to get screwed. When I bought my Fusion, my app got shotgunned to like 20 different banks and credit unions even though I qualified for 0% for 72 months through Ford Motor Credit and I walked in and said that's what I wanted right off the bat. It would be better for everyone if that process was made illegal and dealers were forced to actually disclose how much a customer is paying them upfront so there wouldn't be incentive to pull shenanigans with financing.

Re: Car Dealership Inquiries

Save-n-Invest — Fri, 01 Nov 2019 16:42:14 GMT

@JGGM wrote:
Regarding the "biggest kickback" comments - you do realize we (dealerships) already know each bank's 'pay plan' right? Meaning if it was only about the dealership's pay - then we'd only use one or two banks.....not 16-20.

Often times - the number of inquiries depends on the credit profile - and not just a score. There is such thing as a 'bad' 740. Some banks view multiple auto loans worse than others, some score inquiries harder than others, some times the LTV is high (think rolling negative equity into a new deal), etc. There's any number of reasons.

I'm not saying some dealerships do not work the way you suggested, but I do think it's a misrepresentation to say the only reason for the inquiries is to pad the dealer's bank account - if this was the case, you'd have one (maybe 2) inquiries. Also most states have laws that limit rate markup, etc.

At any rate, if inquiries is you're primary concern, just do as other people suggested and arrange your financing before you walk in to the dealership.

Dealers in this area don't like cash buyers. My last car purchase I left the first dealer with a teller's check for the purchase. The sales manager refunded my deposit when it became apparent that this was indeed a cash sale. The sorry salesman talked about financing more than the car. I listened to that balderdash for three days. I told him any sale would be cash from the jump.

After leaving the dealer I went to my branch bank to write not used for intended purpose on the back of the check and redeposit it to my savings. The teller's jaw dropped when she saw it was the check payable to a car dealership. She showed it to several bank employees. She told me that was the first time she ever saw a car dealer let someone with money get away. I told her it's not that unusual.

The manager followed me to the door amused to ask me what excuse this dealer uses.

The next dealer where I actually bought the car tried the financing nonsense too. I stopped the salesman in midsentence and told him it's cash or no sale.

Next time I think I'll do a private sale. Car dealers are too much of a hassle. When in the sale phase they bug the devil out of you to use their financing. In the service department everything functions as designed until the warranty runs out.

Re: Car Dealership Inquiries

FinStar — Fri, 01 Nov 2019 16:52:41 GMT

The last few posts have veered off course , let's make sure to stay on topic with regard to the OP. Thank you.

FS

Re: Car Dealership Inquiries

FinanceGuy205 — Sat, 02 Nov 2019 00:48:46 GMT

I ran the finance department for several departments.

Sorry @Saeren, you’re clueless. I stopped counting amount of incorrect things you wrote.

Re: Car Dealership Inquiries

FinStar — Sat, 02 Nov 2019 01:10:52 GMT

Just dropping by with a reminder that all posts must conform to the Friendly, Supportive and Respectful forum etiquette guidelines. This is not an option. Thank you for your cooperation.

Re: Car Dealership Inquiries

Anonymous — Sat, 02 Nov 2019 01:53:07 GMT

Believe it Pal...

The reason given was 7 inquiries in a short period of time, 6 from the dealr and 1 from capital one..

I dont have any other negitive ites on my report, my credit card is less than 20%.

Somethings dont make sense but they happen.

Re: Car Dealership Inquiries

DaveInAZ — Sun, 03 Nov 2019 00:06:37 GMT

@Anonymous wrote:
Believe it Pal...

The reason given was 7 inquiries in a short period of time, 6 from the dealr and 1 from capital one..

I dont have any other negitive ites on my report, my credit card is less than 20%.

Somethings dont make sense but they happen.

Well, at a lender where their credit decisions are able to be reconsidered by an actual human being they would look at your credit report and see "Oh, 6 inquiries for an auto loan, buying a car eh? No problem, I can approve you". But Capital One credit decisions are controlled by an omnipotent Matrix where human questioning of machine decisions is not permitted.

I'm actually OK with Cap One, been with them for some and have a couple cards with them, but their software system really does control all credit decisions with no deviations allowed. Give it a few months for the inquiries to age and try again.

Buying a car is all but impossible to avoid multiple inquiries. I bought my car in Sept. 2017 and went in with a pre-approved loan from a small local credit union that had financed my trade-in, I walked out with 5 inquiries. That is totally my fault for not being tougher and telling them "take my pre-approved loan or I'm out of here", but I did end up with a 1/2 point better loan and the inquiries are all gone now.

Re: Car Dealership Inquiries

Anonymous — Sun, 03 Nov 2019 17:11:24 GMT

JGGM It is irrelevant whether they know a FIs "payment plan." The bank has to accept and agree to the loan, they won't do that without reviewing the CR in question. PLUS, banks rates are negotiable to dealerships, so they shop for the biggest kickback, that simple. Maybe some do it differently, but that is the norm, as far as I know. Matter fact, you should go to the car loan forum and read the general info, it'll explain all this.

Of course they would use more than just a couple banks, they have a wide variety of people they are trying to finance with different CRs. A profile one FI would accept, another may not.

The_Rooster If its not true, what is participation? Its the commission earned by the dealership/finance guy. You admitted yourself the dealer "hold[s] a point or two." Read post #3:

https://ficoforums.myfico.com/t5/Auto-Loans/Guide-to-Financing-Leasing-and-Refinancing-a-Car/m-p/2898736/highlight/true#M38212

You are correct that it matters which algorithm the lender uses. And the dealer knows which lender uses what. And hes gonna hit all 3 CRS multiple times to attempt financing with the highest number of FIs.

I'm speaking from experience. Last vehicle I purchased, I made them pick the CRA they wanted to use and kept the others froze. I don't mind the FIs I'm not gonna use getting all the errors they want. I ended up with 4 pulls on one CRA and financing at a great rate.

Also, keep in mind the inquiries were de-duplicated from 4 to 1 because they were close in time, so my scores don't suffer as much, and only at the one CRA. Plus the ding doen't hit for 30 days due to the buffer.

Re: Car Dealership Inquiries

CA4Closure — Sun, 03 Nov 2019 21:01:07 GMT

Correct. When I bought my F-150 Raptor, my dealership ran my credit and immediately I was assigned to Ford Motor Credit. They gave been the best deal and my credit report was dinged about 5 points. At that time, my FICO was 750. Today after 2 years it is in the 830-850 range.