Car Dealership Inquiries

[Anonymous]

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@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.

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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. 

[Save-n-Invest]

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@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.

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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. 

[FinStar]

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

FS

[FinanceGuy205]

I ran the finance department for several departments.

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

[FinStar]

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.

FS 

[Anonymous]

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.

[DaveInAZ]

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@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.

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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.

[Anonymous]

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/289...

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.

[CA4Closure]

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.