Tips For Subprime Borrowers and How Edmunds Got It Wrong Again



Edmunds.com is a great site to go to for basic information about vehicles with reviews from editors and real life customers. The site also shows you warranty information for vehicles and gives you a pricing guide.

But Edmunds also gives advice while painting all car dealerships with a broad, and unflattering, brush. They seem to think that all dealers are out to gouge their customers and screw their lenders. Its like saying that all golfers cheat on their wives! Anyway, here are some "hints" from Edmunds and the truth behind their faulty advice.

Edmunds Advice # 1 -- Check Your Credit Report
Edmunds.com advises you to regularly check your credit report. I cannot argue with them there. It is a good idea to keep a handle on your credit report and how things show up. Studies show that up to 4 of 5 credit reports contain errors.

Edmunds Advice # 2 -- Access Your Score
Here the only get it partly right. They recommend getting your credit score from each of the three credit reporting agencies -- Equifax, Experian and Transunion. But they don't tell you that:
  1. You have to pay for the score
  2. There are different scores for each report and some don't have anything to do with auto financing
  3. Usually one credit reporting agency is dominant in your area. Getting your scores from the other companies is a waste of time and money.

Edmunds Advice # 3 - Don't Rely on the Dealer

Well, you can imagine I would have an issue with this one! Edmunds claims that "Dealers take a cut of all car financing deals they land," suggesting that we mean old car dealers make money every time we get a loan approved. This could not be farther from the truth. Most often, we have to "pay" to get your loan purchased (called a discount). Borrowers with little to no chance of getting financing on their own are afforded the chance to improve their credit because a car dealer was willing to pay a fee to get the loan bought.

These fees can range from a few hundred dollars to thousands of dollars. And even on the few loans wherein dealers are paid a commission based on the rate, the customers could not get financing approved under the same or better terms on their own. Local banks and finance companies are just not willing to do these kinds of loans on a face value basis.

Surely if you can get approved with your local credit union or bank, you should do that and compare rates. But if your are a "subprime" borrower, odds are you cannot and should go see a dealer. We would be happy to help you at www.cawcawcaw.com.

Edmunds Advice #4 - Shop Around

You should always explore your options, but remember, each time you apply for credit it is recorded on your credit report. And if you apply at different type places (i.e., a bank, a credit union, a finance company), it will lower your score, making it harder for you to get approved. If you apply through a dealers, most of the inquiries are lumped together as one and will NOT hurt your score. So there is another time a dealer can help when others cannot!

So, to wrap things up -- Edmunds is right that you should stay informed and that knowing your credit score is important. But their advice to steer clear of dealers and to shop around is for the birds. You should just pick a dealer you can trust who would like to do more than just sell you a car. A dealer like us - Consumers Auto Warehouse in Staunton, VA. Give us a call at 877-972-2769 or send us an email at ajwiley@cawcawcaw.com.

Comments