What is considered tier 1 credit?

what credit score(s) am I looking for to be a tier 1 credit rating for car leasing purposes?

Like raw credit scores from the major 3 or a FICO score?


720 and above is tier 1

if it’s just a few points shy of 720 i’ve seen the finance mgr “push it through”…there’s a little wiggle room from what i’ve seen. It’s been years though.

is the 720 a FICO score from credit card companies or from one of the big 3 creditnrating agencies like transunion equifax or experian? specifically which one ?

If it’s around 700 they push it through to tier 1 to make a sale

it’s from one of the three credit bureaus. Dealerships will usually pull one of them, in FL i’ve seen them mostly use Equifax, not sure how it is in other states.

@RVGuy can break this down a bit

However - score is only one umpteenth of the basis.

I have had clients get put on B tier for car X and with a bit less car they jump to A tier.

In my understanding LTV (Loan to Value) is the driving force on tier.

How do you calculate LTV?

This is a massively complex topic but I can shed some light into the various lenders i have studied.

Each lender has a unique criteria to determine which credit tier each customer fits into. Several lenders have developed their own scorecard that is based on many different factors in addition to FICO from one or multiple bureaus. Some will use FICO from specific bureau or the middle of all 3 bureaus.

Some lenders will have more tiers with smaller increments. Others have fewer tiers with very large increments.

Some lenders are black/white in their cutoff while others allow for exceptions at the discretion of the credit analyst. Some dealers have a great relationship with a specific lender and can build up a history of solid performance for the paper (credit apps) they are selling to the lender.

Basically, if you have a FICO above 780, you’ll almost always qualify for any lender’s top tier. Now, even if you qualify for the top tier, the dealer may try to mark it up and make a “reserve”. Some lenders pay out a flat fee at the buy rate or a % of the net cap cost.

In terms of LTV, each lender also has a specific value they are using for the denominator. NADA, KBB, Black Book and other sources are used.


@RVguy As always, thanks for the wonderful insight. You definitely deserve to be a part of @trusted_hackrs.

Fellow LHers, please like the following post to vote in favor of this.


@Jon Anytime… That voting thread didn’t really work as intended since some people were recommended multiple times or several in one post so I think the actual votes were diluted for some. I don’t need a tag on my profile to keep coming here and pulling back the industry curtain. Leasing was designed to be complex from the get go. There is a steep learning curve to not getting screwed.


I have wondered about how this works…

So how much money is this worth to a dealer for a given loan ? On say a $25k loan for someone with Tier 1 credit ?

What’s my loan (originated through the dealer) worth to them ? Do you have some example numbers or a ballpark way to estimate this ?

It’s complicated. Credit history is much more important than score. Although score does play a part, it is a rather small one. It varies very highly bank to bank. Dealerships have more pull with captive lenders and they’re more likely to be able to give someone a higher tier than a third party bank. There is no set score or magic number in order to get into Tier A/1. In addition, the Finance Manager you get plays a huge role. There are some that are better than others, some know the credit analysts and can “push through” an approval at a much higher level while others may not have the same ability. There are also little tricks and tips that Finance Managers can do in order to sort of “Trick” the automated system into an approval. Now, I only know a little bit in the huge world of Auto Lending from my time selling cars, but I have a few good examples.

For example, TFS (Toyota Financial Services) is a captive lender. They can basically do whatever they want and the dealerships have a lot of play with them. A good Finance Manager will pull credit and analyze it before sending it in to see if they can get the customer bought. If the Finance Manager think for any reason that a customer may not be able to get bought, there are a few things they can do. If someone gets denied right off the bat, that’s it, there’s no getting them approved with that bank. However, if you can get any approval, you can then play with the numbers and see how it affects the rates. This could mean putting an extra 0 behind the down payment or maybe a lower trim level.

Just to show the credit score doesn’t matter, I once had a customer get bumped up to a Tier 2, with a credit score in the low 500’s. Why? She never paid anything on time, other than Toyota. She had a bunch of paid Toyota finances/leases with no missed/late payments. She had her priorities straight.

MCS (Mazda Capital Services) is NOT a captive lender. Although the name might fool people, it’s really just JPM Chase with a fancy name on it and they have special programs for Mazdas. It is much harder to get approvals with them, and I’ve even got 740’s declined because of a lack of installment loan history.



Each lender has a different strategy to pay dealers to push volume to them. Some pay a flat $ fee (usually in tiers based on the net cap cost) or flat amounts based on brand/model (US Bank does this). Some lenders pay a flat % of net cap cost at the buy rate and some allow dealers to mark up the MF specific increments to make higher %s of net cap cost. Some lenders also allow dealers to mark up the rate (capped at some equivalent APR increase) and split the additional rate income with the lender anywhere from 60/40 to 80/20.

On the flat fee side, US Bank is paying anywhere from $400-800, depending on which models they are targeting. Ally pays flats based on the net cap cost tiers and it varies from $150-$750.

Credit unions often pay a flat % of net cap cost (1% and 2% are most common) to avoid different rates on similar credit tier customers. A few credit unions allow dealers to mark up the rates and split it.

Most captives still allow for rate markup splits with the dealers. So a dealer can take a buy rate of 0.00080 and potentially mark it up say 2% (APR). So a customer qualifies for the 0.00080 rate but the dealer maxes out the markup to 0.00163. The dealer splits the 2% and gets 75% of the additional income that higher rate brings the lender. There is usually a 90-day charge back policy so a customer needs to make at least 3 payments before the dealer gets paid.

So depending on the dealer participation/reserve/flat structure and net cap cost of the vehicle (and in most cases retail loans pay out similar structures to leases) they can make anywhere from a couple hundred per deal up to a couple thousand per deal. I have seen some 60mo leases where the dealer maxed out the rate markup and they were paid out as if the lease went full term. So on a $45k net cap cost the dealer made around $3,500.

I’m sure some of the people on this forum that have worked for high volume dealers can chime in with more real world examples of the profit levels they have seen.

The CFPB has received a lot of flack for how they went about regulating the auto finance targets. They surely didn’t do everything right but having seen first hand what their investigation looked like on the lender side, the eventual outcome greatly reduced the variable price gouging that can occur. They only really looked at the lenders above a certain threshold so a lot of the smaller captives still allow dealers the option to mark up rates to obscene levels which still leaves open the potential for certain groups of individuals to get bad deals.



Thank you for that information.
I can use it next time I buy or lease a vehicle in my negotiation. Knowledge is power !


yes big thanks that was one helluva exsplanation

Same thing for Chrysler Capital - it’s just re-branded Santander

Volvo’s captive is similar. Bank of America provides funding, underwriting and risk based pricing with some Volvo-specific credit criteria.

Wow, I had no idea. There was Volvo Finance, then Cab LLC (Ford), then US Bank… Now it’s Volvo Finance again but through BofA

Yeah the BofA as a white label captive happened in 2012. It has been working well for them since they jump-started the brand when the new product pipeline got going again!