What Happens When You Apply for Financing?
At most dealerships, the Finance and Insurance
(F&I) Department provides one-stop shopping
for financing whether you buy a used car or a
new one. You will be asked to complete a credit
application.
The dealership will obtain a copy of your credit
report, which contains information about current
and past credit obligations, your payment record
and data from public records (for example, a bankruptcy
filing obtained from court documents). For each
account, the credit report shows your account
number, the type and terms of the account, the
credit limit, the most recent balance and the
most recent payment. The comments section describes
the current status of your account, including
the creditor’s summary of past due information
and any legal steps that may have been taken to
collect.
Dealers typically sell your contract to an assignee,
such as a bank, finance company or credit union.
Your credit application will be submitted to one
or more of these potential assignees to gage their
willingness to purchase your contract from the
dealer.
These finance companies will usually evaluate
your credit application by using credit scoring,
where a variety of factors, like your credit history,
length of employment, income and expenses will
be reviewed.
Your dealer may be able to offer manufacturer
incentives, such as reduced finance rates or cash
back on certain models. Be sure to ask the dealer
if the model you are interested in has any special
financing offers or rebates. These are usually
only available for certain models, makes or model-year
vehicles.
If there is no special financing offers available,
negotiate the annual percentage rate (APR) and
the terms for payment with the dealership-as you
would the price of the vehicle.
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