What is a Dealership’s Promise Worth?
In auto finance, your rate is heavily influenced by your credit profile.
While every lender has different rules, there are specific thresholds where you effectively level up or down in the eyes of a lender.
This customer contacted us from the Dapto area, and already had a car picked out at a local dealership.
He had a credit score of 504. Just above a threshold that drastically increases the choice of lender.
We secured a rate of 11% on a $40k loan. A strong result for the profile.
Lofty Dealership Promises
When the dealership selling the vehicle was located in Albion Park, NSW.
When they saw the rate, they claimed they could do better.
While it’s tempting to shop around, there were two major problems with this:
- Dealerships rarely have access to the same breadth of specialist lenders that a broker does.
- If they submitted a formal loan application just to check the rate, it would have hit the credit score bringing it under 500.
In that scenario, the customer is at risk of losing the pre-approval.
The Consequence of a Score Drop
If the score had fallen below 500, the original 11% approval would potentially have been voided by the original lender.
The customer would then be restricted to sub-prime lenders, where rates are significantly higher.
Turns out they couldn’t beat the pre-approved rate anyway, but they could have hurt the customer finding that out the hard way.
The lesson here is to be wary of a dealership that make big promises, without the technical understanding to back it up.
Especially if your credit score is in the mid to lower range.
Avoiding Disaster
So what stopped the customer from attempting to secure a better rate?
The answer, is they knew they couldn’t do better.
The team at Gusto Finance will take the time to explain your options and how they are impacted by the various issues on your credit file that leads to a ~500 credit score.
In this case, there were some missed payments on a past car loan. So major banks and prime lenders would likely reject an application.
We knew exactly where he would be treated best, and we made sure the customer understood this.
So when he was met with lofty promises he knew it was a fools errand.
Another Speedy Result
Another same day turnaround from approval to settlement.
- 9:00 AM: Application submitted.
- 10:00 AM: Full Approval received.
- That Evening: Contracts signed.
A great outcome from the team in a scenario where things could have gone south.