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Paying all cash for new car, but dealer is requesting a credit application???

3238 Views 64 Replies 36 Participants Last post by  johnre
is there a legit reason for dealer to complete a credit application when paying all cash and already provided copy of valid driver license? If this happened with you, how did you handle it?
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Mine requested me to fill one out, but after I explained I would be paying cash (purchased through VIP discount so no need to negotiate) they no longer required it.

To be clear, I did not complete the credit check, but I had purchased several vehicles from them in the past.
 

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2020 Outback Premier 2.5i
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IMO, if you're providing a certified cheque or bank draft there is no need for this. Question is, if it is a deal breaker are you willing to walk away and go somewhere else where they don't require it? I figure that an inquiry that results from such an application has a negative effect on your credit report for a period of time because (if you pass) you're cleared for borrowing that amount. That amount could be regarded as a liability that you've been approved for when you go for financing for something else. I may be out to lunch with that, but it's what I've been led to believe. It's why I don't accept credit card applications for freebies or discounts when I walk into stores. All those accepted applications become potential liabilities to the tune of the total credit limits I've been granted.
 

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We traded our truck for our 2022 Outback Touring and the dealership owed us 9k plus the car. They still did a credit check but I have no idea why it was needed. They did the check, everything was good and we left in our new car. Not a big deal.
 

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I’ve heard of dealerships requiring it even for people who were offering to pay cash as a blanket policy. We’ve paid cash for 2 Subarus at our dealership and they never said anything to us about a credit application. When I did my order back in the summer for my OB thru the VIP they didn’t ask for a credit app or a deposit or anything. I walked in, placed the order and they said we’ll call you when it’s here. I don’t even remember having to sign anything.
 

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I paid with a personal check.
that’s your answer, it wasn’t certified funds. Often it’s a tactic to flip to financing, and they have to do the Patriot Act stuff irrespective of how you pay (credit app will usually cover that and OFAC), but if you’re paying in cash-cash or a certified check they don’t need it because the funds are secure. Even if they call the bank and the funds are in your account, no guarantee they will be when they present the check, hence the credit app.

congratulations on the new car!
 

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that’s your answer, it wasn’t certified funds. Often it’s a tactic to flip to financing, and they have to do the Patriot Act stuff irrespective of how you pay (credit app will usually cover that and OFAC), but if you’re paying in cash-cash or a certified check they don’t need it because the funds are secure. Even if they call the bank and the funds are in your account, no guarantee they will be when they present the check, hence the credit app.

congratulations on the new car!
FYI, I’m not the OP and earlier stated I did not complete a credit check.
 

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We traded our truck for our 2022 Outback Touring and the dealership owed us 9k plus the car. They still did a credit check but I have no idea why it was needed. They did the check, everything was good and we left in our new car. Not a big deal.
Perhaps you should have asked them for the credit check, not vice versa. :)
 

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Dealerships have responsibilities by various State and Federal Laws as well as their franchise agreement to know who they are doing business with. Certified and Cashiers Checks are easily forged and I have lost a substantial mount of money as a recipient of those instruments. Any cumulative cash amount more than $10,000 requires reporting to the IRS and one must establish proof positive of the person paying.

Dealerships are victims of fraud far more often than the public can imagine. The way to offset that risk is to know as much as possible about the person you are doing business with. Many of your sales will be to repeat customers you are familiar with and or local folks who by various means you can easily identify. When faced with a complete stranger or someone from out of the area, a credit report is the quickest way to establish some familiarity.

I once sold a new Rolls Royce to an out of state buyer who when it came time to pay wanted to give me a cashiers check and refused to give me the information to pull a credit report. I passed on the sale when he refused to wire the funds to my bank. He did purchase from another dealer and it took them about six months to find their car when the check turned out to be a forgery.

A hard inquiry on a credit report will generally cause the score to go down temporarily about four or five points. Not enough to make a significant difference. You are not automatically charged with the liability of whatever you are approved for. That only comes when the lender starts reporting to the credit bureaus the actual loan that has been put into place.
 

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is there a legit reason for dealer to complete a credit application when paying all cash and already provided copy of valid driver license? If this happened with you, how did you handle it?
walk out, there is no reason to run a credit check unless you are financing though them. it is a ploy to get your information.
 

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I’ve always paid with a certified check drawn on my bank account. Mainly because of my being uncomfortable carrying a large amount of cash between the bank and dealership. I’ve never had an issue with a certified check. Then again, I‘ve never had nefarious intent to defraud anyone.
 
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I had some clowns on a previous car purchase try these shenanigans with me. I have been in financial law enforcement for over 20 years at that point. Had outside financing and brought my 9k deposit in cash with me. Then they drop a credit app in front of me. I look up at the finance guy, look at the funds form the local credit union, my 9k and cash, and then ask him what credit, loan, or other financial instrument I'm asking them to lend to me. He goes hold on a second, leaves the office and about 30 seconds later, I grab all my paperwork and cash and start to walk out. He sees me leaving and runs over with the GM and asks what's going on. I told him you are completely wasting my time and I'll go buy a car somewhere else. He says, ok, ok, no credit app. I say great, and your going to take another 500 off the car. He looks at me like I'm crazy. I start walking toward the door again. He runs up again apologizing and to let him see if he can get 500 off. I'm like if you can get approval before I get to my car. He relents and says let me redo the paperwork, 500 off. Deal done. What I'm saying is don't let the purchase of a new shiny car blind you to shenanigans these clowns play. It's your money, spend accordingly.
 

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Ah yes! The dealership tough guy routine. YOU GOT 'EM!

well it is clear what type of people get bent over at the dealer... hint it is not the people that understand that it is your money and what information that they do and do not give to the dealer.

I wrote a personal check for my last car at a dealer, no other information was required than what was already on the check.
 

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Ah yes! The dealership tough guy routine. YOU GOT 'EM!
If you think that's a "tough guy" routine, apparently you got picked last for dodgeball in school quite often. It has nothing to do with a routine. I have a say in how my money, and time, is spent, maybe you operate differently. Different strokes and all that.
 
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