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[爆料] 車行專用的信用報告不同之處

markoolo 發表於 2009-4-21 23:01:04 | 顯示全部樓層 |閱讀模式
檢視: 9018|回覆: 6

A Secret Credit Score Your Car Dealer Won't Tell You AboutThe car dealers may use what is known as the FICO Auto Industry Option score instead of a traditional FICO credit score to detrmine the interest rate you will pay for financing. The difference can mean thousands in interest payments.
You're ready to buy a new car.

You've done all your homework.

You know your three FICO credit scores.

You determine that your highest FICO credit score is from Equifax (also known as your BEACON score).

So, you find a car dealer who uses your highest score (which increases your opportunity to get approved at a good rate).

You get to the dealership and ignore all the salespeople by going directly to the finance director's office.

But as the finance director reviews your credit file in front of can't help but think something is wrong.

Sure enough...the dealer says your Equifax/BEACON score isn't high enough for their lowest interest rate.

How can this be? You just checked your FICO credit scores through a few hours ago. It's possible—although unlikely—the information on your credit report has changed and that your scores have decreased since you last checked them. Remember, your credit scores are dynamic and will change whenever information on your credit reports changes.

Your credit reports can change several times each month as new information is added or updated by your lenders. But more than likely, your scores wouldn't change in this situation (especially if there were only a few hours between when you checked your scores and when the dealership reviewed your credit reports).

So, if your credit reports didn't change, why is the finance director staring at your scores with such a discouraging face?

Car Dealers Can Use "Different" FICO Scores Than The Ones You See

The car dealer is probably using what is known as the FICO Auto Industry Option score instead of a traditional FICO credit score. You see, car dealers not only get to select the credit reporting agency they receive FICO credit scores from...they also get to decide if they will use a traditional FICO credit score or a variation of a FICO score called an Auto Industry Option score.

What's the difference between these two types of scores?

Not a whole lot to most people...but there's enough variation to make the majority of auto lenders use the Auto Industry Option score. The real difference between the two scores is that the Auto Industry Option score pays a lot more attention to how you handled previous auto credit.

- Have you made late payments on a current or previous auto loan or lease?
- Have you ever settled an auto loan or lease for less than you owed?
- Have you had a car repossessed?
- Have you had an auto account sent to collections?
- Did you include your car loan or lease in your bankruptcy?

Those actions will affect your Auto Industry Option score more than they'll affect your traditional FICO score. Bottom line, if you handled your previous auto credit perfectly, you should have a high FICO Auto Industry Option score—that's a good thing.

But what if you've had a few bumps in the auto credit road in the past? You guessed it...your Auto Industry Option score will be lower. You'll be perceived as a greater credit risk and the auto lender may either deny you or use your lower score to justify charging you a higher interest rate.

You see, auto lenders are different than other types of lenders. And I'm not talking about their slimy ways, leisure suits, short ties, manly hairy chests, or gold bling.

A lot of other lenders look at your whole credit picture to determine whether or not to give you a loan. But many auto lenders care about only one you handled your past AUTO credit. That's what a FICO Auto Industry Option Score gives car dealers—a way to pinpoint how you've handled what matters to them the most.

So, even if everything else on your credit reports went down the toilet after your bankruptcy, if you didn't include your auto loan in your bankruptcy and never defaulted or missed a car payment, your Auto Industry scores will probably be better than your traditional FICO scores!

What a Former Auto Finance Director Revealed to Me

I recently spoke with a former finance director, and this is what she told me...

"So many people I have helped couldn't believe their scores were so high with the FICO Auto Industry Option score. They had included all their credit card debt and their mortgage in their bankruptcy, but they reaffirmed their auto loan. What's good about the auto score is that it truly helps the auto lender concentrate on what is important—how the customer handles his/her auto loans.

By our dealership having the auto enhanced FICO, it helped 30% or more of our customers get better rates."

I don't believe I'm going to say this, but I think I may actually have found something good to say about car dealers! Well, some of them, anyway...

As you can see, the FICO auto scores can work in your favor, if they are used correctly.

OK, I just wouldn't be able to live with myself if I only said good things about car dealers.

So, in the interest of fair and balanced reporting, here's how to protect yourself against slimy car dealers that can use your FICO Auto Industry Option
scores against you...

A Dirty Trick Car Dealers Can Play with Your FICO Scores

Let's imagine your Equifax/Beacon FICO score is 585. Not too good. With a score that low, if you do get approved for a car loan, you'll probably wind up with a high interest rate and high monthly payment.

So you go to a dealership and talk with the finance director and tell him your Equifax FICO score is 585. The finance director then reviews your FICO Auto Industry Option score. And, unknown to you, this score is actually higher than the Equifax/Beacon FICO score you pulled.

With this higher score, you'll get approved at a better rate...right?

Not necessarily!

Here's what unscrupulous car dealers can do. They won't tell you that your auto score is higher than your traditional score!

They figure they have a sucker sitting in front of them. So they'll try to get you financed at a higher rate based on the lower FICO score (thus making more profit for themselves).

How Some Car Dealers "Play the Spread" to Get You to Pay More

Now check this out...

It's possible that a car dealer has the ability to pull your traditional FICO scores AND your FICO auto scores. That means they'll have six scores on you. It's a guarantee that some of those scores are going to be higher than the others. So which ones will they use when trying to get you financed?

It depends.

Are you familiar with the term "spread"? It's how car dealers make money when they finance you. If they can quote you a higher interest rate than you deserve—then they stand to make a nice chunk of change from the bank that finances you.

The only way to make a killer "spread" is to make you think that you have lower scores.

So, what can you do?

Don't despair...I can help you.

How to Use Your FICO Scores to Your Advantage when Buying a Car

Fortunately, you don't have to fall for their dirty tricks. Now that you know all about FICO Auto Industry Option scores, you can protect yourself. Here's what I suggest...

1. When you first walk into the finance director's office, don't tell him what your FICO scores are. Wait until he reviews the scores himself. Then ask him what your scores are.

2. If the scores he reviewed are higher than the ones you have, don't say anything and just go by his scores.

3. However, if your scores are higher, then pull them out and show him. If he has a choice in the type of scores he can use, there's a possibility that he'll be able to use your highest score. And, it will let him know that he doesn't have a fool sitting in front of him. He can't take advantage of you!

How do you find out what your FICO Auto Industry Option scores are before you walk into a car dealership?

You can't.

Sorry. They're not for sale—at any price. Only lenders have access to them.

FICO would like to sell them...but there just isn't enough demand. I mean seriously, up until you read this article, had you ever heard of the FICO Auto Industry Option score?

 樓主| markoolo 發表於 2009-4-21 23:02:11 | 顯示全部樓層
Remember, we were just given access to purchase all three of our traditional FICO credit scores on June 11, 2003 at 8:00 a.m. (I actually got misty that day...what a geek I am.)

Only a very small percentage of the population even knows they have three FICO credit scores...let alone three Auto Industry Option scores.

So How Can You Use This Information to Help You Get Your Next New Car Financed at the Best Interest Rate

1. First, get your three credit reports. If you handled your previous auto credit well—your FICO Auto Industry Option scores will be higher than your traditional FICO scores. So expect more from the lender.

2. You can also ask the lender to show you their tier levels. Tiers are basically charts lenders use that have different interest rates based on your scores. You want to see which tier your fall in. To see an example of an auto lender's tier schedule, click here.

3. If they won't show least have them break it down verbally for you. (Personally, I like to see it with my own eyes, as I never believe a word that comes out of most car dealers' mouths.)

4. If you've handled your auto credit poorly...then you should simply try to find an auto lender that uses just the traditional FICO credit scores. When you find a lender that uses a traditional FICO credit score, you'll have your best chance to get the lowest interest rate.

5. Start by calling dealerships and asking the finance director if they use a traditional FICO credit score to make their lending decision or if they use the FICO Auto Industry Option score.

These steps will get you headed in the right direction. This won't be easy, as a lot of car dealers use the FICO Auto Industry Option score.

 樓主| markoolo 發表於 2009-4-21 23:06:05 | 顯示全部樓層


You fill out a credit application at a car dealership. You're led in to see the finance manager who happily announces, "Great news! I can finance you at 9.9 percent."

You're tempted to say, "Sounds good. Let's do it." But then doubt sets in. Isn't the prime rate 6.5 percent now? How do I know this is the best rate I can get?

So instead of readily agreeing, you say, "That rate sounds a bit high."

"We base our interest rates on your credit score," he tells you.

Naturally, you ask, "So what was my credit score?"

Now the tap-dancing begins. The finance manager tells you your credit is good — but not that good. There are a few little things on it ... But at the end of this shuffle he might say, "You know what? I just remembered there is this other bank where I think we can get you 9.1."

Well, you've just saved yourself some money. But the rate still might not be as low as you can get. After all, if you don't know what your credit score is, you can't aggressively demand the best terms.

The interest rate you pay on financing your new car is like so many other things at the dealership — open to negotiation. So how do you go about getting the best deal? And is it worth haggling over a few percentage points?

First things first: Yes, it is definitely worth trying to get the best interest rate possible. While one percentage point might not seem like much, applied to a five-year loan it can be significant. For example, on a $20,000 auto loan at 9 percent for five years, according to the loan calculator you would pay $415.17 a month. But if you financed the $20,000 at 7 percent, you would only pay $396.02 a month — a savings of $1,149 over the five-year period. And because of the way car lease payments are calculated, they have a greater impact when leasing than when buying.

Clearly, a low interest rate is important. To accomplish this, make sure your credit report is up-to-date and all black marks have been removed. Those things that can negatively affect your credit include the following:

Late payments
Non-payment of bills
Any financial blemishes will lower your score with the most commonly used credit ratings agencies: Experian, Trans Union and Equifax. These companies generate a rating which, for most people, falls somewhere between 330 and 850, and are called "FICO scores" named after Fair, Isaac & Co. Over 800 is considered perfect. Below 800 may put you on a lower credit tier. In the 600s you find yourself in the "sub-prime" area and will pay inflated interest rates. Higher interest rates are justified by lenders who say there is a risk the person will default on the loan. (Visit the FICO Web site for a more complete description of how credit scores are interpreted.)

Auto dealers rely heavily on FICO scores in setting your interest rate when you buy a new or used vehicle. Therefore, it's in your best interest to know your credit score before you visit a dealership. Otherwise, it may come as an unpleasant surprise in the finance and insurance room when you set up your loan.

It's a good idea to check your credit scores periodically. In some cases, people who have common names might find someone else's misdeeds on their record. Besides that, if your credit is sub-prime, you will be subject to a number of expensive — and unpleasant — practices.

Two extreme cases are referred to as spot deliveries and bogus insurance sales.

A spot delivery occurs when a dealer looks at a customer's credit and sees that they will probably qualify for a car, but they don't have all the information to set up the loan. They allow the customer to take the car while they continue trying to get them qualified. In some cases, the customer is told to return to the dealership and a new contract is generated — at a higher interest rate.

In other cases, a customer is told that their credit is weak and they can't buy the car unless they pop for an expensive extended warranty or additional insurance policy. This is a false requirement intended for dealer profit.

Consumers should also know about a practice used in the auto business called "dealer markup." Here's how it works. You go car shopping and agree to buy a vehicle for a certain price. You then tell the salesperson that you are either going to finance the car or lease it through the dealership. Before you go into the finance and insurance room to review the final documents, the finance manager begins shopping for a car loan on your behalf. She may find that you qualify for a 7 percent loan over five years.

Now things get sticky. The finance manager calls you in and says, "Great news! I can give you this loan at 11 percent." Obviously, she has marked up the interest rate 4 percentage points. The difference between what the bank charges the dealer and what the dealer charges you is their profit.

Is this illegal? Absolutely not. Is it unfair? Well, it depends how you look at it. They've done you a service by arranging the loan. For their work, they are making a profit.

However, you want to save as much money as possible. The easiest way to do this is to arrange your financing before you go to the dealership. Check with your credit union or bank (keep in mind that interest rates are slightly higher for used-car loans than new car loans). Auto loans will usually be one or two points above the prime rate, which fluctuates throughout the year.

Once you have been approved for a car loan, it's easy to go to a dealership and negotiate only for the purchase price of your new car. You will be asked several times throughout the process how you plan to pay for the car. Give them a relieved smile and say, "I'm paying cash for the car." This doesn't mean you are going to give them $20,000 in cash. It means that the dealership will receive one lump-sum payment for the car.

There are times, however, when financing through a dealership makes sense. Sometimes, the manufacturer offers to loan money at exceptionally low interest rates such as 2.9 or even 0.9 percent. If you can qualify for these special programs, you should take advantage of them, though they often mean reduced payment periods such as 24 or 36 months.

Bottom line: Don't be held hostage by the dealer. Do yourself and your family a big favor — clean up your credit report before you begin the car shopping process. Next, nail down a low-interest loan from an independent lender such as your credit union or bank. Then, and only then, hit the car lot and start shopping.
 樓主| markoolo 發表於 2009-4-21 23:09:21 | 顯示全部樓層


 樓主| markoolo 發表於 2009-4-21 23:13:20 | 顯示全部樓層

QUESTION: Can the car dealer run my credit report and put me in a car loan without my permission when I'm paying cash?

I recently bought a car and I paid cash. I was certain I will not be financing and opted not to provide my social security number.  They said they will not complete the deal without it and they absolutely must get my SSN. I gave up and filled out their information, along with my driver's license number, and just about every other piece of personal information I could think of.  In the final paperwork process, they had the computer set up so I could see what they were entering and I noticed they were trying to setup financing terms.  I inquired why he is doing anything related to financing, because I'm paying cash. His reply was "In case your check doesn't go through, we'd like to make sure we have financing arranged."  Why did they downright demand for my SSN when I'm paying for the car cash? Plus I believe they pulled my credit report.  Does the law(state of Oregon here) allow this, and are they required by law to disclose they're running a credit report?  It's been over a week and I see that my check has not been cashed.Is it possible that they're processing a loan under my name?  Thank you, (Name withheld by request)


Well first of all, most states require a social security number to transfer a title into your name. It could be that is the reason they wanted yours. Of course if that's the case, they should have told you.  As far as that line of bull they told you "In case your check doesn't go through, we'd like to make sure we have financing arranged" I'm sure that is illegal.  Especially after you told them "No Financing!"  The only way they could put a loan through is if you signed all the loan papers. Tell me you didn't do that! If you signed loan papers, well...then you have nobody to blame but yourself.  As long as you didn't sign loan documents they can't just put a loan through without your permission.  They can't run a credit check on you either without your written consent...usually by having you sign a credit application. If you didn't sign one and they ran your credit you can go after them legally.  You can find out if they ran your credit by requesting a copy of your credit report from the credit bureau. Any inquiry into your credit will be listed on your report. Get Your Free Credit Report.  To be sure they are not trying to screw you call the owner of the dealership and or the General Manager. Express your concerns and ask why the finance guy told you what he did. Tell them all they had to do was to call your bank to verify your check or request that you actually bring cash.  If they try to pull anything on you file a complaint with the Better Business Bureau and with your state's Attorney General's office. And tell the dealership this is what you will do if they try to screw you.
 樓主| markoolo 發表於 2009-4-21 23:15:28 | 顯示全部樓層

Money Saving Tips
For Car Buyers: First, do your homework. Learn all you can about dealer tricks because they can quickly erase any discounts or other savings that you think you're getting. Car dealers spend millions of dollars training their salespeople to get more money out of customers, and if you don't know the tricks they use, you could be overcharged by thousands of dollars. Find out the dealer's real cost on the car (it's typically less than invoice) and the prices that smart shoppers are paying for that car, then research any other items you might want (loans, extended warranties, car alarms, etc.). Shop around for competitive auto loan (or lease) rates at banks, credit unions and lenders on the Web. When you find a great interest rate, get pre-approved at that lender before you start negotiating with dealers. If a dealer can beat the rate you found, let him finance the car -- on a "simple interest" contract only. Otherwise, stick with your pre-approved loan. And don't forget to shop around for insurance before you buy that new or used car, or you may be in for a shock. To save you time and money, we've listed the best places for you to get free quotes on new or used cars, auto loans, car insurance, extended warranties and more. (Keep reading.)

When your homework is done and you're ready to buy, you start the negotiating process -- where dealers quote prices and you make counter-offers. If you've done your homework properly, this process should result in less haggling -- and lower prices. To make dealers compete (and drive the price down), use the Internet to get at least 4-5 price quotes before you start negotiating with any dealers. When you get to the contract stage, make sure the dealer doesn't slip any hidden charges into your loan or lease. (This is known as "payment packing.") To avoid this common rip-off, calculate your own monthly payments first. Finally, always negotiate the price of the car, not the monthly payment.
clairebear04 發表於 2009-7-7 08:07:50 | 顯示全部樓層

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