[G05 7074]

I purchased a new car and I'm financing it through BMW Financial Services. A few weeks after buying the car I got a letter in the mail from Chase Auto saying they couldn't approve my credit application for a vehicle.

I did not contact Chase Auto.

Why did my dealership submit a credit application on my behalf to Chase Auto?

[Phizbam]

Originally Posted by G05 7074

I purchased a new car and I'm financing it through BMW Financial Services. A few weeks after buying the car I got a letter in the mail from Chase Auto saying they couldn't approve my credit application for a vehicle.

I did not contact Chase Auto.

Why did my dealership submit a credit application on my behalf to Chase Auto?

Is it possible that they were "shopping around" for a better interest rate at Chase over BMW Financial Services? It's likely that you signed something that gave them the approval to apply for financing and allow them to send your information to one or more financial institutions.

My suggestion would be to call the dealership and talk to the finance person you worked with when you signed your papers and ask them why they submitted an application to chase on your behalf.

[puckybadger]

I think as a matter of normal procedure dealerships "send over" credit applications to a variety of lenders to compare rates and conditions.
Possible your dealer has a special relationship with Chase where they match offers and pay more.

[taek]

Should contact your dealer and ask. Been with Chase most of my life and they don't really offer competitive rates on auto or home loans.

[kkratochvil]

Originally Posted by puckybadger

I think as a matter of normal procedure dealerships "send over" credit applications to a variety of lenders to compare rates and conditions.
Possible your dealer has a special relationship with Chase where they match offers and pay more.

+1

Typically, the finance folks at most dealers are looking for the cheapest money for their customers each day, so they're looking to source in your interest. (I'm not saying there aren't other motivations periodically, but if you go do your HW and find cheaper loan options than they do, they're not going to be sourcing loans for long…)

As far as Chase, I disagree a bit, as I know I've had at least 1 case where Chase was who held my loan and was the cheapest money available that day/week….although, I think that's been a number of years. (I think I had an Acura I used them for and then my first BMW was held by them. But it's been 10 years…)

[1Mors]

Originally Posted by G05 7074

I purchased a new car and I'm financing it through BMW Financial Services. A few weeks after buying the car I got a letter in the mail from Chase Auto saying they couldn't approve my credit application for a vehicle.

I did not contact Chase Auto.

Why did my dealership submit a credit application on my behalf to Chase Auto?

Sounds more like identity theft attempt. BMW would have no use for chase.

[jiggie]

They were rate shopping. Pretty normal for auto dealers

[G05 7074]

Originally Posted by 1Mors

Sounds more like identity theft attempt. BMW would have no use for chase.

This is what concerns me! I'm using BMWFS for the loan. Why would my local dealership "shop around" without telling me? And what incentive do they have to get me a better rate than BMWFS?

[Frenetic]

I know some dealers, after looking at your credit and/or if they feel your credit isn’t very strong, will shop around just in case you don’t qualify for your first choice and/or if financing falls through.

It’s also not too rare for you to drive off with a loan only for some underwriter a day later ultimately deny the financing. What happens then is that you (or the dealer) will need to find alternative financing or you have to return the car. I’m not saying your credit is bad, but I also highly doubt it’s identity theft.

[Aimster82]

They get rates from like 5 or 6 different banks. They are not looking at the best rate for you. They are looking at the best rate for them.

BMWFS 3%
Chase 2%

They will print out the loan with the Chase bank at 3% interest and see if you notice.

They are authorized to add markup to the interest rate. BMWFS allows this too. So you should make sure you know the rate before you buy your car.

[Bolt1949]

Originally Posted by G05 7074

I purchased a new car and I'm financing it through BMW Financial Services. A few weeks after buying the car I got a letter in the mail from Chase Auto saying they couldn't approve my credit application for a vehicle.

I did not contact Chase Auto.

Why did my dealership submit a credit application on my behalf to Chase Auto?

Take a minute to review the credit check authorization you signed with the Dealership during your purchase process. The fine print on that document may have addressed this use. This is often included in the "stack" of paperwork one signs when shopping for and purchasing a vehicle (nowadays this is sometimes done on a signature pad). My guess is that you will find that you gave the Dealership permission to do this without realizing it.

[jiggie]

Also, this won't count as another hard pull on your credit. All pulls related to the auto loan within a 14 up to a 30 day period are counted as one.

[LogicalApex]

Originally Posted by kkratochvil

+1

Typically, the finance folks at most dealers are looking for the cheapest money for their customers each day, so they're looking to source in your interest. (I'm not saying there aren't other motivations periodically, but if you go do your HW and find cheaper loan options than they do, they're not going to be sourcing loans for long…)

As far as Chase, I disagree a bit, as I know I've had at least 1 case where Chase was who held my loan and was the cheapest money available that day/week….although, I think that's been a number of years. (I think I had an Acura I used them for and then my first BMW was held by them. But it's been 10 years…)

The dealership is the absolutely not shopping in your best interest. They are shopping in their own best interest and they have a strong incentive to push you a rate that’s as high as you’re willing to accept. They are given kickbacks for financing with their chosen lenders and they are given bonuses on that kickback if they can convince you to pay more than the “best” rate available to you.

If you go into a dealership looking like a fat goose (meaning you have no financing in hand with an interest rate on hand) they’ll pluck you. Just like everything else in car buying. Go in uninformed and unprepared and you’ll get fleeced and they’ll smile while they do it.

Hell, when I purchased my BMW, the only BMW I’ve purchased so far, I had the dealership refuse to use my lender and refuse to even offer BMWFS as an option. They were upfront about not wanting to use BMWFS as I had beat them up so much in my negotiations that they had no profit in the deal. They then refused to accept my credit union financing and had me “cooling off” with back and forth stories for over an hour until I caved (they did match my CU rate though which was .5% better than theirs).

You’d ask why didn’t I just get up and leave? It was an ordered car that I waited 2 months to get and I had negotiated them to a really low number…

I’d absolutely never ever walk into a car dealership without financing in hand. That’s the only way to know their blowing some serious smoke up your *** when they tell you their rate. It also means they now have to work for that kickback they desperately want. Instead of finding ways to offer you a “low price” on the deal while backfilling it on how much extra they get you paying out the other end.

[Phizbam]

I got financing through my credit union before I went in to pick up my car in March 2022. The dealer had no problem with it and frankly even told me that there was no way that they could have even come close to the interest rate I got. BWMFS rate was 2.99%, and the rate through my credit union was 1.74%.

[LogicalApex]

Originally Posted by Phizbam

I got financing through my credit union before I went in to pick up my car in March 2022. The dealer had no problem with it and frankly even told me that there was no way that they could have even come close to the interest rate I got. BWMFS rate was 2.99%, and the rate through my credit union was 1.74%.

The kickbacks are making it a more common practice by the dealerships.

https://www.wsj.com/articles/car-dea...hare_permalink

Glad you went in armed and ready

[The Libertine]

Originally Posted by Aimster82

They get rates from like 5 or 6 different banks. They are not looking at the best rate for you. They are looking at the best rate for them.

BMWFS 3%
Chase 2%

They will print out the loan with the Chase bank at 3% interest and see if you notice.

They are authorized to add markup to the interest rate. BMWFS allows this too. So you should make sure you know the rate before you buy your car.

+1. A very accurate summary.

[G05 7074]

Originally Posted by The Libertine

+1. A very accurate summary.

Let me get this straight. The dealer gave me the 2.99% rate. If Chase approved and offered 1.50%, I would have continued paying 2.99% while they pocketed the difference?

I get "marking" up BMWFS's rate (e.g., giving me 3.99% while BMWFS is charging 2.99%). But if Chase is giving *me* a loan in my name, how can the dealer go to any bank (such as Chase), just to make more money off of me??

[LogicalApex]

Originally Posted by G05 7074

Let me get this straight. The dealer gave me the 2.99% rate. If Chase approved and offered 1.50%, I would have continued paying 2.99% while they pocketed the difference?

I get "marking" up BMWFS's rate (e.g., giving me 3.99% while BMWFS is charging 2.99%). But if Chase is giving *me* a loan in my name, how can the dealer go to any bank (such as Chase), just to make more money off of me??

I know you didn't quote me, but...

I already explained how this works... But you can even read the WSJ I linked to (I was nice enough to link to the non-paywall version )

They are given kickbacks for financing with their chosen lenders and they are given bonuses on that kickback if they can convince you to pay more than the “best” rate available to you.

You wouldn't have any clue what the full story is if you didn't go in prepared. In the fictional case you shared here. The dealership would never tell you that Chase is willing to finance you at 1.5%. Instead they would likely tell you that Chase has the best rate and offer you the 2.99% rate with Chase. Netting them a kickback from Chase for delivering them a whale and getting an extra kickback for getting you to accept a rate 100% higher than Chase would have otherwise given you (since you'll deliver Chase a nice profit).

The Finance room is where the dealership makes the bulk of its money on a deal. They have a lot of tricks up their sleeve to do it. It isn't just overpriced warranties.

[rpm50i]

exactly why i walk in with a loan already approved in my backpocket.

[mjr24]

Originally Posted by G05 7074

Let me get this straight. The dealer gave me the 2.99% rate. If Chase approved and offered 1.50%, I would have continued paying 2.99% while they pocketed the difference?

I get "marking" up BMWFS's rate (e.g., giving me 3.99% while BMWFS is charging 2.99%). But if Chase is giving *me* a loan in my name, how can the dealer go to any bank (such as Chase), just to make more money off of me??

Dealers are going to gouge you as much as possible right now….on the car and financing.

[puckybadger]

Originally Posted by LogicalApex

I know you didn't quote me, but...

I already explained how this works... But you can even read the WSJ I linked to (I was nice enough to link to the non-paywall version )




You wouldn't have any clue what the full story is if you didn't go in prepared. In the fictional case you shared here. The dealership would never tell you that Chase is willing to finance you at 1.5%. Instead they would likely tell you that Chase has the best rate and offer you the 2.99% rate with Chase. Netting them a kickback from Chase for delivering them a whale and getting an extra kickback for getting you to accept a rate 100% higher than Chase would have otherwise given you (since you'll deliver Chase a nice profit).

The Finance room is where the dealership makes the bulk of its money on a deal. They have a lot of tricks up their sleeve to do it. It isn't just overpriced warranties.

The good news, I think, is that there is a maximum that a dealer can markup the rate, perhaps 3% that way an unsuspecting customer is not gouged too bad

[TurtleBoy]

Originally Posted by puckybadger

The good news, I think, is that there is a maximum that a dealer can markup the rate, perhaps 3% that way an unsuspecting customer is not gouged too bad

For BMWFS financing, they can only mark it up 1%.