Why Good Credit MattersNov 02, 2021
On a daily basis, I search the internet for credit and finance related matters. Today, I came across this which I found appalling:
As an automotive finance manager myself, allow me to explain what a car dealership wants:
We want someone with moderately bad credit, not BAD CREDIT. 600-680 is our sweet spot. Less than 600, and we PAY A FEE to banks to buy a deal from us; that takes away gross profit from the deal. Over 600 we generally get PAID A FEE from a bank to buy a deal. The most we can mark interest rates up is GENERALLY 2 points and most customers don't see/feel the difference between a 10.9% vs a 12.9% as an example. Over 700 is great BUT the more educated the customer the less likely they are to buy service contracts, maintenance contracts and gap AND try marking up a 5% to a 7% and that good credit customer will walk out fast as hell. In a nutshell, we want a customer with bad enough credit that they don't sense the interest rate markup and who values being protected with service contracts and gap.
If you TRULY want to bring value to a dealership and what they would salivate over is if you explain that all of your customers CAME from bad credit so they still value being protected, wouldn't blink over a 2 point markup because the 7% they get now is so much better than the 18% they were getting before BUT have good enough credit now to get approved with no Bank fees. Finance managers DREAM. We call that a lay-down. I hope this brings value to y'all so that you understand how dealerships think.
So it seems that car dealerships are a lot like the credit bureaus. They want to manipulate your information in order to make more money off of you. They want to take advantage of your lack of car buying education in order to sell you what are overpriced, and many times, unwarranted items. I'd suggest you print this off and take it to a dealership with you the next time you are wanting to buy a car. Happy borrowing...
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