Usually a 700+ Fico Auto score will get you Tier 1. Did you fill out a credit application? What is your current approximate score? A 3% APR translates to a 00125 Money Factor, which sounds just about what the base money factor would be with maximum markup.
I’ve been personally sat down and “shamed” for my credit by a Chevy dealer, only to realize it was an elaborate strongarm to convince me to accept a marked up interest rate.
I’ve always thought it is kinda strange when the sales team asks you how much money you make, and then reviews your detailed credit report line-by-line, and then when they use that information to influence how much they should charge you for your new car. Really, all that matters on a car sale/lease is the cost of the deal. It’s not a great business practice to say (“Well this car costs $268/month to lease at base rate & MSRP, but this customer just told me point-blank he makes $350k/yr, so I bet he can afford $385”).
If you go to buy a couch at Ashley Furniture, there’s a computer where the buyer applies for credit, and it prints out a receipt saying how much you’re approved for (and rates you’re approved for). The salesperson and finance manager doesn’t need to know your personal financial/credit situation, they just need to know your Tier to close you. The system is set up so your salesman isn’t looking over your shoulder when you punch your Income and SSN into their computer.
Dealers reaching deep into your credit history to convince you to take a higher rate, or looking at your income to convince you on a higher deal price, is essentially the foil behavior of customers looking for a gutted deal.
You’ve researched the base MF rate, invoice cost, holdback cost, in order to compute the dealer’s true cost, so you can offer just above or behind it. Likewise, the dealer has researched your earning potential and spending habits (by way of doing the credit app), to make you an offer that is just above or just behind what your personal situation can afford.
You’re trying to base your leverage in the dealer’s true cost, meanwhile they’re trying to base their leverage in your true spending power. I don’t recommend this approach on either side. But, I understand why a dealer might take this approach when a customer comes in with all the numbers, and an argument for a low-profit deal.
All that really matters between buyer and seller is what a market-based selling price and interest rate are. If the market supports a $350 payment for a V8 muslce car, then that’s pretty much what you should be expecting to pay. If you demand that the dealer comes down to their cost, regardless of market, don’t be surprised when they start playing the same games with your personal finances.
And if you say “My income and what I can afford has no bearing on what I’m willing to pay for this car” - you’re completely right. But the dealer is also right when they respond with “My true cost on this car has no bearing on what I’ll sell it to you for, cars sell at market price”, because you’re saying the same thing as the dealer.
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This dealership is running circles around ya with this credit stuff. 700+ should be tier one… don’t let them strong arm you.
You need to start off with the basics of dissecting the deal and making sure you know what MF’s are good and what are bad for Camaro this month.
Advertisements are usually very misleading with cars too; don’t read into those much.
Remember you’re the one with all the power not them.
I think your dealer is giving you a deeper discount and making it up by marking up the MF. 7% isn’t unheard of, but higher than most at about 4-5%
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It’s worth adding that if a higher rate is required by the bank as a result of you credit, there are specific disclosure requirements. A dealer that says “we have to mark you up because of your credit” but doesn’t properly disclose the mark up is violating federal law. Now, this disclosure would be part of the contract rather than the offer, but it’s an easy way to “verify” their story (and raise hell if they’re being fraudulent).
Yes, exactly! I left out this detail because I didn’t want to read like an ad, but this is the precise reason why I started advertising the bottom-dollar for all 7 Hyundai Motor Finance credit tiers. It really feels shitty, as the buyer, to get beat up about your Credit Score, when it was actually fine all along.
I’m really looking to push change in the industry and progress past that practice, but it will probably still happen as long as customers try to get cars for below dealer cost.
If I was the dealer here, I’d just ask you two questions:
- “So you’re definitely set on leasing a V8 RWD muscle car?”
-and- - “Can you find a V8 RWD muscle car for lease anywhere for less than $400/month to shop against me?”
If you answer “yes” and “no”, then you really don’t have much more shopping to do. Despite being marked up, he’s still the cheapest V8 sportscar in town.
If you answer “yes” and “yes”, then go buy the cheaper one with the cheaper MF and tell this guy to kick rocks!
Customers will continue to try to get vehicles below dealer cost as long as dealers will sell them below cost, and dealers will continue to sell below cost as along as it continues to be in their interest to sell those vehicles below cost.
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Agree! As long as that happens, dealers will continue research the customer’s income, credit report, LinkedIn profile, data about spending habits bought from the customer’s credit card company, etc and use that personal info to justify higher profit margins on a case-by-case basis. If you’re gonna make it about dealer cost, dealers respond by making it about your cost.
I’ve never once given a dealer access to my credit before a deal was agreed on (obviously with the agreement being that it was contingent on tier 1 credit). They don’t get access to any of that information ahead of time if you don’t provide it.
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Two things.
- You’re not most people. You’re an extreme edge case of the car buying population. Most people are pressured into getting their credit run and explained at the dealer.
- I don’t need your permission to get a really close approximation of your credit. “Soft” bg check tools will give a really good idea. With the minimal amount of info you provide, the dealer is doing a lot background bg research on who you are, what you do, how much you make, what your interests and spending habits are, etc. If you go through great lengths to hide all that info (fake identity/email/phone/etc) the fakeness of your info is also a data point for the salesman, and not one that gets you the best price or service.
This whole website is about teaching people to not be “most people.”
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That’s fine. Just understand that the dealer sees all kinds of people, from all walks of life. It’s just part of the nature of being in a retail job.
They have ready-to-go playbooks for every type of person there is.
The experience you get at a good dealer is tailor-fit to what they think is most likely to sell you a car.
Just as you want to be as informed as possible about the dealer’s financial position in selling you a car, they want to be as informed as possible about your financial position. For most deals, the salesman google-mapping (or Zillow-ing) your address, and quickly checking your LinkedIn is as important of a starting point for them, as looking up MF and RV on Edmunds is for you.
The salesman never has my address until after we have agreed on a deal, nor access to my linkedin or any other information about my financial position. The only effort they have to put into selling me a car is to say “yes”. All these games waste everyone’s time. The most they’re getting out of me ahead of a signed deal is maybe my zip code (which does have some basic demographic information, sure).
So you NEVER test drive before buying/leasing a car?
Again, this is fine, but MOST people do test drive before buying.
Test drive requires license, license requires address. Salesman Zillows address while photocopying license.
Are you saying that nobody should ever test drive a car before buying it, just so the salesman can’t judge you by your home address?
Sure I do, and I give them then same offer as every other dealer. I have had the dealer I test drive at accept my offer once, every other time I’ve done business elsewhere.
So yes, one of the many dealers out there has my information, and if they try to charge more than their competitors as a result, they don’t get my business.
because of this site, I like to think i’ve gotten pretty good at this stuff, but i dont claim to know evrything. When i said yes to this deal (320 a month including taxes and no down!) then i let them run my credit. usually, these ads will say must have tier 1 or must be over a certain fico score. however, chevy just said " GM financial must approve you". So i assumed(maybe my bad0 that since i had a solid credit score with not a single late payment in my 48 years on this planet that i would get the best rate. its still a great rate , but feels a tad weird
Did they provide you written documentation of what changes were required by the bank and what that credit decision was based on, per the fair credit act above? If they didn’t, then this was just them making up an excuse to mark it up.
They have every right to mark up the mf. They don’t have a right to claim it’s because of your credit if it isn’t.
If they ran your credit they should have a three bureau FICO Auto score report that you are entitled to see. Without knowing your score it sounds like they are marking the MF up to me. That’s not the end of the world necessarily, you should know if you qualify for the base MF though. This way you can try to find another dealer who won’t mark it up on you.
This isnt correct. They can bump the MF but I would counter with a comparative pre-incentive discount to make up the hit. I took a bit of a MF hit to get a better discount overall and a monthly I was happy with.
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Mario, ur LT1 was the exact color combo as the one I was going to get. And ur payment was literally exactly what I was gonna pay, until they started the MF game!! They are one hell of a car!!
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