Being asked to fill out a credit application is a common occurrence in auto shopping. Sometimes, the minute you walk into the car lot, the salesperson would be eager to get your information right away. You’re not comfortable with the gesture, and you’re sure you’re not the only one who feels that way, but you wonder why dealers still do it.
Privacy is important to everybody, and you have the right to fear sharing your social security information with anyone without a sensible purpose, but before you feel violated in any way, here are the main reasons auto dealers want to run your credit report:
Check for Fraud
Just like you, car dealers also put a premium on preventing identity theft. They want to make sure that they’re dealing with the right person — and not somebody who pretends to be someone else. In fact, you’ll still need to fill out the credit application when paying cash; dealers are mandated by the government to run the report as per the Red Flag Rule.
Deter Shady Shoppers
Sometimes, salespersons ask potential buyers to fill out the credit application to test if they can really afford to buy the car, or at least, see if they are serious about making a purchase. They’re only protecting their business against suspicious buyers, which may damage the vehicle during test-drive.
See Which Loan You Qualify for
Ultimately, Arkansas bad credit car loan and new auto financing dealers will use your credit report when speaking with different lenders. Lenders have to see your credit-worthiness first before they can offer a certain type of financing and at what interest rate. In essence, they judge your ability to repay based on your credit history.
The only time you really have to fill out the credit application is when you’re ready to buy a particular vehicle. To avoid being forced by anyone to run your report prematurely, check your credit history yourself beforehand to show the dealer your word is enough to discuss business at this stage.