When Knowing Your Credit Score Is Not Enough

September 29, 2010

Car buyers are often told that they need to know their credit score prior to walking into a car dealership to buy a vehicle. Readers of this website know that I recommend that consumers go one step further and get pre-approved on their car loan at a bank, credit union, or online lender.

Why do I recommend the extra step? Although I ended up as Internet Manager for a major car dealer, it was during my early days in the industry that I learned first-hand why just knowing your credit score is not enough.

Bill’s tale

A few years ago I worked with a fellow named Bill who let me know up front what his credit score was. He walked onto the sales lot of the major car dealership where I worked and said, “Look, don’t play games with me. I checked my credit score online before coming here and it’s 698. I’ll expect a good interest rate if I find a car I like.”

What could I say but congratulations on having such a good credit score and that I’ll do my best to get him the best rate possible.  In truth, I was new to car sales, I was still being trained, and I didn’t have a clue if he would get a good rate or not. That’s up to the sales manager who puts the deal together.

Bill was sitting at my sales desk having just completed his credit application. Procedure dictated that I take the loan application to my Sales Manager. After working the figures, he gave me a print out of the proposed deal and threw me back into the game.

As I walked up to desk where Bill was sitting, I followed my training script to the letter, “Good news, Bill. Because of your excellent credit score we were able to get you a very low interest rate. And the low interest rate made it possible to reduce your monthly payment to just $324.77.”  I turned the proposal around so Bill could see the figures. “Sign right here and I’ll get started on the rest of the paperwork.”

A smile spread across Bill’s face. After barely glancing at the figures, he grabbed the pen out of my hand and with a flurry, signed his name. An hour and a half later Bill drove home in his new car.

The moral of the story

After Bill drove away in his new car, I walked into my Sales Manager’s office. I asked him if Bill actually got the lowest possible interest rate on his car loan. The manager was quick to respond, “I love it when someone comes in knowing their credit score. They feel safe and in control, just like Bill did today. But if they don’t know what interest rate that credit score qualifies them for, they’re playing right into my hands.“

It was common in the early days of my automobile sales career to fail at getting a straight answer from my sales managers. It was as if the interior working of the car business was a big secret, and I didn’t know the secret handshake yet. This was no exception.


I went away thinking that poor Bill probably paid a few points more than he should have on his car loan. However, even I couldn’t be sure. And I know that despite Bill's assumption that he got a good deal, he didn't actually have a clue. Unless you know exactly what rate you qualify for, you’ll probably never know if you got a good deal on your car loan from your local car dealer. Most people discover the interest rate they should get by being pre-approved on their car loan before they ever set foot in a dealership.

And that is why knowing your credit score is often not enough to protect you from dealers who love to bump your loan rate to increase their profit in the deal.

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