Buying a new car without having dealer do credit check?

[squirm]

My wife and I would like to buy a new car in the next month or so. However, we're also on the verge of buying a second house. The car we can easily pay for outright with cash. However, my thought is don't do anything that might lower my credit score since we will be incurring a large mortgage soon.

So is it possible to buy a new car without having a credit check done?

[dailybagel]

I like the idea of instituting a credit freeze, then going to the dealership. Was suggested http://www.bogleheads.org/forum/viewtopic.php?f=2&t=104221

They will not be able to do a credit check without your contacting a specific credit bureau.

[jghassell]

If you put a freeze on your report with all three bureaus, no one can check it without you lifting the freeze. This is a great way to prevent "drive by" inquiries like this. You can lift the freeze once you have bought the car so that you can get the mortgage.

[squirm]

Geez, thanks guys and thanks for pointing out that old post!!

Stupid question here, but who are the big three credit bureaus?
also:
Can they be frozen while we get mortgage pre-approval? Or should we do that first?

Thanks guys.

[SpringMan]

Geez, thanks guys and thanks for pointing out that old post!!

Stupid question here, but who are the big three credit bureaus?
also:
Can they be frozen while we get mortgage pre-approval? Or should we do that first?

Thanks guys.

Google shows this-
http://www.dummies.com/how-to/content/t ... reaus.html

[retiredjg]

I agree that freezing your credit might be a good idea. But it's unclear if you intend to pay cash or finance the car. If you pay cash, they should not be doing a credit check at all. So if you are worried about having a credit check, you must be considering financing?

There is more than one type of credit check. A "hard pull" is what you want to avoid because too many hard pulls might indicate that you desperately need money. However, if you finance through an institution with which you already have a financial relationship (your bank, your credit union, etc.) when they do a check, it is not counted as a hard pull. I think (but am not sure) that freezing your credit does not affect credit checks by institutions with which you already have a relationship.

So it seems there might be 2 solutions to your question. Either pay cash or finance through your current bank, credit union, etc.

[Daniel Sa]

The three main credit bureaus are Transunion, Experian and Equifax. Quick fact: "New credit applications or new credit inquiries" account for 10% of your total credit score. To answer your quesion... Yes, there are ways that your credit report can be viewed without having a negative impact on your credit scores, this is called "soft credit pulls". This youtude video helps you understand credit and how it's built: http://youtu.be/uuKhrnyUQ68 . An example of soft credit pull is when the consumer pulls their own credit report to verify accuracy and learn about your credit score... this can be done once a year for free (annualcreditreport.com) and it does not have any negative impact on your credit scores.
In this scenario, I would recommend that you start out by pulling your own credit report, but make sure you pull a tri-merge credit report, in other words, all 3 bureaus combined because different dealers typically use diffent credit bureaus so by having a tri-merge you'll cover all your basis. Once you have your tri-merge credit report in had, you can visit the dealerships, and by showing them your recent pulled credit report, they'll be able to work out your financing options without having to do a credit check. Once you find a good deal, and you are ready to buy the car, an actual credit pull will be reqquired and you can request that the dealer does a single bureau pull to complete the transaction. This will prevent multiple credit inquiries from being pulled every time you walk into a different dealership and therefore protect your credit scores.
Other than the credit scores, there is something else for you to keep in mind if you are purchasing a new home. Unless you have a very low DTI (debt to income ratio), I would recommend that you purchase the car after you close on the new home, because the new car payment will be counted against you and will have an impact on the DTI used to qualify you for your new mortgage loan. Second home or investment property purchase loans have stricter requirements and require a lower DTI ratio (maximum 40%) than the DTI requirements for an owner occupied primary home. Feel free to contact me if you have other questions regarding credit, or purchasing / refinancing homes.

[dailybagel]

I agree that freezing your credit might be a good idea. But it's unclear if you intend to pay cash or finance the car. If you pay cash, they should not be doing a credit check at all. So if you are worried about having a credit check, you must be considering financing?

OP was worried that the dealer would do a credit check even if he pays cash. Some dealers do this, citing insurance regulations, the need to evaluate customer creditworthiness when accepting a check, or "the Patriot Act". I think it is not a consumer-friendly practice and would not tolerate it myself as a customer.

[rsc601]

I'm pretty sure they will do a credit check even if you are paying cash, or at least in southern California where I live.

My father and mother-in law both bought cars in the $20,000 range in the last 5 years and paid cash - Nissan and Hyundai. Both dealers needed to do a credit check for some reason - they just said it was part of their protocol.

[stat5]

They insisted on a credit check during my last purchase. It got heated and I almost walked. I had BOA on the phone arguing with the manager. I won the battle. This was in CA.

[retiredjg]

OP was worried that the dealer would do a credit check even if he pays cash. Some dealers do this....

News to me. I don't care what they tell you about protocol, insurance, etc., that sounds like a load to me and I don't see any reasonable reason they need this info.

I'd be walking out the door, right beside stat5.

[Leesbro63]

I believe dealers often do credit checks to "qualify the buyer". They don't want to waste time with someone who can't qualify, even if they claim to be a cash buyer.

[markfaix]

For dealers in my area, they are trying to make sure the check is good. Most dealers where I live check credit if you're giving a personal check, but do not require a credit check if you present a cashiers or certified check.

[stan1]

For dealers in my area, they are trying to make sure the check is good. Most dealers where I live check credit if you're giving a personal check, but do not require a credit check if you present a cashiers or certified check.

This is what I did. Max credit card ($4000, so $40 back on a 1% cash back credit card) + cashier's check from credit union = no credit pull (in Southern California)
This was at a dealership that I expect sees many cash transactions.

[Grasshopper]

If a dealer asks to see your drivers license for a test drive, they are pulling a report.

[windaar]

If a dealer asks to see your drivers license for a test drive, they are pulling a report.

Don't they need SS# to pull a report?

[LadyGeek]

The wiki has some background info: Credit score

[JustBill]

If a dealer asks to see your drivers license for a test drive, they are pulling a report.

Don't they need SS# to pull a report?

Often information is readily available without SS#. DL# speeds the process and zeros-in on the correct "John Smith". These are soft pulls however and are used as qualification tools to manage time and product selling.

[Mudpuppy]

For dealers in my area, they are trying to make sure the check is good. Most dealers where I live check credit if you're giving a personal check, but do not require a credit check if you present a cashiers or certified check.

This is what I did. Max credit card ($4000, so $40 back on a 1% cash back credit card) + cashier's check from credit union = no credit pull (in Southern California)
This was at a dealership that I expect sees many cash transactions.

I think the key statement here is that the dealership sees many cash transactions. Those that do not see many cashier's checks might not understand that cashier's checks are as good as actual cash and there's no possibility of it bouncing, ergo they don't need to do a credit check. As the old saying goes, never attribute to malice what could be attributed to ignorance.

[windaar]

I walk in right off the street and the dealer can pull my report, without my agreement or knowledge? I can't believe that is true. I understand if I am requesting credit, or if I have signed something with fine print, but otherwise that can't be legal.

[Jerilynn]

So is it possible to buy a new car without having a credit check done?

Yep, just write them a check for the full amount. Been there, done that.

[Jerilynn]

I agree that freezing your credit might be a good idea. But it's unclear if you intend to pay cash or finance the car. If you pay cash, they should not be doing a credit check at all. So if you are worried about having a credit check, you must be considering financing?

OP was worried that the dealer would do a credit check even if he pays cash. Some dealers do this, citing insurance regulations, the need to evaluate customer creditworthiness when accepting a check, or "the Patriot Act". I think it is not a consumer-friendly practice and would not tolerate it myself as a customer.

Don't give them your SS#, just the check. If they INSIST give them the WRONG SS# and the check. If they come back with any problems, ask them how long it will take to clear it up.

I did this 5 years ago, so not 100% sure what is required nowadays, but I will betcha a pizza that it's possible with some car dealers (especially used)

[Jerilynn]

For dealers in my area, they are trying to make sure the check is good.

All they have to do for that is phone the bank and ask if there is enough $$ in the checking account to cover the check.

[Jerilynn]

For dealers in my area, they are trying to make sure the check is good. Most dealers where I live check credit if you're giving a personal check, but do not require a credit check if you present a cashiers or certified check.

Are they doing this INSTEAD of calling the bank or IN ADDITION TO calling the bank?

[Jerilynn]

If a dealer asks to see your drivers license for a test drive, they are pulling a report.

Can they get a credit report on you without a SS#?

[jghassell]

If a dealer asks to see your drivers license for a test drive, they are pulling a report.

Can they get a credit report on you without a SS#?

Yes

[retiredjg]

I went in search of reliable information and found this: http://www.ftc.gov/os/2004/07/040709fcraappxf.pdf (which seems to be a layman's summary of the law/regulation found here http://www.fdic.gov/regulations/laws/ru ... dic6500604) .

Regarding the Access to your File is Limited paragraph - my interpretation is that a car dealership should not be pulling a credit report unless you actually apply for credit. But it does not actually say that specifically and in the law/regulation, it refers to "legitimate business need" without further description. That leaves a lot of room for people to construe and misconstrue.

If what a business does is a violation, your recourse is a lawsuit in state or federal court and I suppose most people would not go to that much trouble. So abuses could be rampant. Or maybe the lawmakers meant for there to be wide latitude.

It does say that your employer must get written consent to pull a credit report. Since it does not say that for businesses, I interpret that to mean they do not have to have your written or verbal permission.

Theoretically, I think (not sure) it should be difficult or impossible to get a credit report without a SSN, but I suspect it can be done in a round about manner. For example, use DL info (name, DOB, and address) to get a telecheck type report, find the SSN there, and then use all that info for a credit report. I'm not saying this is possible, but just a made up example of how people can use databases in ways not intended.

Perhaps someone who actually pulls these types of reports for businesses could give us the benefit of actual knowledge and experience.

So if you really want to lock this thing up tighter than a drum, you'd have to put a freeze on your credit reports and also not give out any info that could lead someone (even in a roundabout manner) to info you don't want to be accessed. To me, it is just normal procedure to leave my DOB and SSN off of any form where it is not specifically needed. Maybe, since this thread, I'll think about the freeze thing....

[retiredjg]

Can they get a credit report on you without a SS#?

Yes

jghassell, maybe you can provide more info?

[stan1]

For dealers in my area, they are trying to make sure the check is good. Most dealers where I live check credit if you're giving a personal check, but do not require a credit check if you present a cashiers or certified check.

Are they doing this INSTEAD of calling the bank or IN ADDITION TO calling the bank?

I did not buy with a personal check, but my understanding is that the dealer I bought my car from will accept a personal check -- but as a condition of accepting a personal check you must be approved for and consent to a loan at a very high interest rate which takes effect if the check bounces. They do not call the bank.

Because of this I went to the effort to get a cashier's check, but I'm sure there are many customers who want the car right away.

[Jerilynn]

So if you really want to lock this thing up tighter than a drum, you'd have to put a freeze on your credit reports and also not give out any info that could lead someone (even in a roundabout manner) to info you don't want to be accessed. To me, it is just normal procedure to leave my DOB and SSN off of any form where it is not specifically needed. Maybe, since this thread, I'll think about the freeze thing....

Fair enough. Say you freeze your credit reports, buy a new car and the dealer says you need to unlock it so he can fulfill the 'regulations'. You refuse to do it. What happens then?

[Jerilynn]

For dealers in my area, they are trying to make sure the check is good. Most dealers where I live check credit if you're giving a personal check, but do not require a credit check if you present a cashiers or certified check.

Are they doing this INSTEAD of calling the bank or IN ADDITION TO calling the bank?

I did not buy with a personal check, but my understanding is that the dealer I bought my car from will accept a personal check -- but as a condition of accepting a personal check you must be approved for and consent to a loan at a very high interest rate which takes effect if the check bounces. They do not call the bank.

Because of this I went to the effort to get a cashier's check, but I'm sure there are many customers who want the car right away.

I can't recall how many cars we paid for with cash (a personal check), but we were never required to be approved for any kind of credit anything. Could be that because I bought cars from the dealership before with cash and that I was a doctor*, they let it slide. Dunno.




*I not a REAL doctor, just an Endodontist.

[retiredjg]

Fair enough. Say you freeze your credit reports, buy a new car and the dealer says you need to unlock it so he can fulfill the 'regulations'. You refuse to do it. What happens then?

I'd offer to bring in a cashier's check.

If they refuse, I'd take my business elsewhere if I had reason not to want my credit report pulled. But I really can't imagine a business not wanting to take a cashier's check.

If that failed and if there were no other place to get a car (seems unlikely), I'd take out a loan at a credit union where I am already a member (should be a soft pull, not hard pull, but I suspect this might need to be checked first), buy the car, pay the loan off.

I have to admit, there is some part of me that would be tempted to bring in cash, in the form of quarters.

[windaar]

My last 2 cars were bought w/ check. In 2007 the dealer required a cashier's check. Two years later, at a different dealer, my personal check was fine. I have no idea if they pulled a credit report on me. They had no personal info, except my name and e-mail address, until I paid. I drove away 20 min later.

[Tabulator]

I'd take out a loan at a credit union where I am already a member (should be a soft pull, not hard pull, but I suspect this might need to be checked first), buy the car, pay the loan off.

Yeah. Wouldn't that technique actually improve one's credit score, instead of just handing over cash with no loan?

[retiredjg]

I'd take out a loan at a credit union where I am already a member (should be a soft pull, not hard pull, but I suspect this might need to be checked first), buy the car, pay the loan off.

Yeah. Wouldn't that technique actually improve one's credit score, instead of just handing over cash with no loan?

Not necessarily. For a person with no credit history, taking out a loan and then paying if off after a few months would probably improve their score. But I don't think it necessarily works that way for people who already have a credit history.

[Tabulator]

I'd take out a loan at a credit union where I am already a member (should be a soft pull, not hard pull, but I suspect this might need to be checked first), buy the car, pay the loan off.

Yeah. Wouldn't that technique actually improve one's credit score, instead of just handing over cash with no loan?

Not necessarily. For a person with no credit history, taking out a loan and then paying if off after a few months would probably improve their score. But I don't think it necessarily works that way for people who already have a credit history.

What about someone with no previous auto loan -- only credit card and student debt history?

[LadyGeek]

I did not buy with a personal check, but my understanding is that the dealer I bought my car from will accept a personal check -- but as a condition of accepting a personal check you must be approved for and consent to a loan at a very high interest rate which takes effect if the check bounces. They do not call the bank.

Because of this I went to the effort to get a cashier's check, but I'm sure there are many customers who want the car right away.

My husband got his car the same day by applying for a low-interest rate loan, which was approved in a few minutes. They told us they would hold-off submitting the paperwork for a few days until I could get them a cashier's check. A few days later, I handed them a cashier's check and they destroyed the paperwork.

For my car, I wrote them a personal check and drove the car home the same day. What's the difference? I have no idea, but they said they trusted me. It was a different dealer. My personal check cleared a few days later.

[retiredjg]

What about someone with no previous auto loan -- only credit card and student debt history?

It is good to have different kinds of loans/credit. Other than that, I would not want to speculate. I think the link to the information in the Wiki would be most helpful to you. Also, there is a lot of information at the myfico site.

[Jerilynn]

What's the difference? I have no idea, but they said they trusted me. It was a different dealer. My personal check cleared a few days later.

You obviously are viewed as more trustworthy. If you want to make some REAL money, I see a future for you as a Ponzi Sceme person.

[Rupert]

To the PP who suggested giving the dealer a false SS#: Are you nuts? That's a federal crime. If the false number you choose happens to belong to a real person, that's at least two federal crimes, one of which is aggravated identity theft which carries a mandatory minimum 2-year prison sentence. Geez. Don't ever do that.

[Imbros]

In my last used car purchase I paid cash and they didn't ask or mention anyting about credit check. If I were to buy a brand new car, I would do the same. No cashiers checks, etc. I would just pay hard, cold cash. And I would never allow anyone to go check my credit score/report when I pay cash. Never.

[hand]

To the PP who suggested giving the dealer a false SS#: Are you nuts? That's a federal crime. If the false number you choose happens to belong to a real person, that's at least two federal crimes, one of which is aggravated identity theft which carries a mandatory minimum 2-year prison sentence. Geez. Don't ever do that.

Case law seems to read otherwise (at least in Colorado - and is this was for someone taking out a loan!):

http://www.upi.com/Top_News/US/2010/10/28/Using-false-SS-number-not-impersonation/UPI-80121288317800/

[Rupert]

Yeah, I know about the case law (I'm a federal criminal-defense lawyer), but I was trying to discourage people from doing this. Do you want the PP listing a false number and accidentally guessing yours? Don't ever do it. Even if you aren't convicted, an investigation can ruin your life. You want the feds nosing around in your business? Just don't do it.

[Jerilynn]

To the PP who suggested giving the dealer a false SS#: Are you nuts?

Yes

That's a federal crime. If the false number you choose happens to belong to a real person, that's at least two federal crimes, one of which is aggravated identity theft which carries a mandatory minimum 2-year prison sentence. Geez. Don't ever do that.

Good point, I was thinking about maybe swapping one digit and say you wrote it down wrong. But, 2 yrs in prison doesn't sound like fun, so I will never do that.

[Jerilynn]

Yeah, I know about the case law (I'm a federal criminal-defense lawyer),

Kewl, I'll bet you have some interesting stories to tell over a few beers.

[mptfan]

For dealers in my area, they are trying to make sure the check is good.

All they have to do for that is phone the bank and ask if there is enough $$ in the checking account to cover the check.

1) I don't think the bank will (or should) give out your balance information to someone over the phone, or in person for that matter.

2) Even if there is enough funds in the account to cover the check today, there may not be tomorrow.

[mptfan]

I walk in right off the street and the dealer can pull my report, without my agreement or knowledge? I can't believe that is true. I understand if I am requesting credit, or if I have signed something with fine print, but otherwise that can't be legal.

Whether it *can* be done, and whether it is *legal* to do it are two entirely different questions. Unfortunately, many people conflate them.

[Default User BR]

Those that do not see many cashier's checks might not understand that cashier's checks are as good as actual cash and there's no possibility of it bouncing, ergo they don't need to do a credit check.

Other than counterfeit ones. No one should accept a cashier's check unless the provenance is unquestionable or there is a waiting period observed.


Brian

[jghassell]

Can they get a credit report on you without a SS#?

Yes

jghassell, maybe you can provide more info?

Most interfaces with credit providers allow you to retrieve credit profiles from the three major bureaus without a full SSN. Often a name and address is enough for a match.

I worked in a business in the past that checked credit for rentals. All the time we had people refusing to provide their SSN, but when I called in the information, the report and score were retrieved with no problem at all (including the SSN that we didn't have at the time of the inquiry) using just a name and address.

[jghassell]

My advice: never put up with any of this from the dealer. If you're paying cash, make it clear there will be no credit check. Freeze your reports. Write the dealer a check. If the dealer balks, walk away and find another dealer. (In almost all cases, there is another dealer that will take your check.) If you feel up against a wall, you're buying an exotic car and this is the only one, etc., then write the dealer a check and tell the dealer to hold onto the car until the check clears, at which time you'll come pick it up with a printed copy of your cleared check in hand. If you aren't being financed, the dealer has no business checking your credit. We all need to be more resistant to these "drive by" credit checks. Perhaps I am far too old fashioned for my age of 30, but just my opinion.