Hi, can someone help and advise. I negotiated a pretty good price on a 2019 outback (16% off MSRP). But my credit score just falls below tier 1 and the dealer is saying he can still give me the car with an additional monthly amount of $25-40.
Can someone please advise what I can do in this situation.
NA-Tier cosigner?
Subaru’s captive is Chase. If you want to lease a Subaru, 99% chance they are it. If you are outside their criteria for Tier 1 then you need a cosigner or a Finance Manager who can convince their buyer at Chase to get an approval at Tier 1. It it’s your first Subaru, you aren’t a Chase private wealth client (for which they can use their internal scoring) or a personal friend of a manager at the dealership, probably not happening.
Co-signer is your best bet, or pay the freight. The Tier 1 MF is like 0.75%, what is Tier 2 this month?
Without me asking you for your credit score: as I’m writing I’m wondering if you are truly below the threshold for Tier 1 or if they are trying to bump the rate on the back to cover the front. Since you already had a hard credit pull: you COULD have another Subaru dealer that was close in price check your credit and see what rate they’ll give you. They might not give you the lowest price but if they can get you Tier 1 it might end up being less (depends what T2 MF is).
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If the OP really is tier 2… going to another dealer and submitting credit again will solidify that tier 2. They’ll give the same approval as the other dealer and neither will be able to change that. Because what you do for one you have to do for the other to not worry about the legal ramifications of giving different credit decisions for the same customer at two different independently owned franchises.
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IIRC, Chase allows dealer to mark up MF for back end profit. That takes the legality out of it if Dealer B can convince buyer to push through at tier 1.
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The distinction I’m talking about has nothing to do with a dealer’s markup. If you apply through dealer a and you get tier 2 approval you will get tier 2 approval though dealer b so that the lender doesn’t appear to play favorites and end up with a potential lawsuit on their hands. Continuing along this… if you were approved without a stipulation of only being able to take one car and leased 2 vehicles but, from different dealers then, the bank would accept a contract at buy rate from dealer a and a contract with a 0.0020 markup from dealer b without any qualms. What has to happen is both dealers buy rates HAVE to be the same.
There is a way around this but good luck doing it in practice because unless your best friend/relative is one of the sales/finance managers it’s not going to happen. Dealer a has to send a written request to the lender that they are transferring their approval to dealer b. Than dealer b can rehash and get a tier exception if able to. I’ve actually seen this done ONCE (and I did it) in my 18 years in the industry (and 1 of those was at the corporate level as the finance director of a dealer group with one of the stores in my territory a Subaru franchise).
I can’t tell you how many times I’ve seen customers not like the answer they’re given by one dealership and then go to another dealership to try and get a different result but, then not only get the same answer but, also tie the hands of the finance department of BOTH dealerships—and forfeit the possibility of tier exceptions. If any changes do occur it wasn’t because the bank changed their decision, it would be because dealer b dropped their pants more and they may tell you they got you a better tier but, didn’t.
There are exceptions to this as well but, the application has to be different… for example: Add a co-signer or switch from a $60k new leased vehicle to a $30k used financed vehicle. These aren’t really exceptions though. The app just happens to be completely different. So that’s why a lender will entertain further conversations from the finance department in these hypothetical situations.
This is an every lender thing and is not limited to just one captive lender. Even though all my experience at the retail level is in high line, most of us use similar outside lenders for finance transactions like Chase (which we use) and the above applies to all our outside finance lenders as well and not just mY captive (BMW FS). With all that said, who knows though, maybe there’s a lender or two out there that just doesn’t care about potential legal ramifications but, Chase is not one of them.
WOW, I wrote a book!
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One of my favorite tricks is to ask them to show you the approval, let’s you know how straight they are