With the kids heading back to school this week in most states, parents everywhere finally have the bandwidth to focus on the fun stuff... Like car finance!!

In this week’s customer story, a dealership came very close to derailing an existing pre-approval because they claimed they could beat the rate.

Spoiler alert: they couldn’t.

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Customer of the Week

In auto finance, your rate is heavily influenced by your credit profile.

While every lender has different rules, there are specific thresholds where you effectively level up or down in the eyes of a lender.

This customer came to us with a credit score of 504. Just above a threshold that drastically increases the choice of lender.

We secured a rate of 11% on a $40k loan. A strong result for the profile.

Dealership Promises

When the dealership selling the vehicle saw this rate, they claimed they could do better.

While it’s tempting to shop around, there were two major problems with this:

1. Dealerships rarely have access to the same breadth of specialist lenders that a broker does.
2. If they submitted a formal loan application just to check the rate, it would have hit the credit score bringing it under 500.

In that scenario, the customer is at risk of losing the pre-approval.

Turns out they couldn't beat the pre-approved rate, but they could have hurt the customer finding that out the hard way.

The lesson here is to be wary of a dealership that make big promises, without the technical understanding to back it up.

Especially if your credit score is in the mid to lower range.

Avoiding Disaster

So what stopped the customer from attempting to secure a better rate?

The answer, is they knew they couldn’t do better.

The team at Gusto Finance will take the time to explain your options and how they are impacted by the various issues on your credit file that leads to a ~500 credit score.

In this case, there were some missed payments on a past car loan. So major banks and prime lenders would likely reject an application.

We knew exactly where he would be treated best, and we made sure the customer understood this.

So when he was met with lofty promises he knew it was a fools errand.

A Speedy Result

Another same day turnaround from approval to settlement.

• 9:00 AM: Application submitted.
• 10:00 AM: Full Approval received.
• That Evening: Contracts signed.

A great outcome from the team in a scenario where things could have gone south.

What Does Sub-500 Look Like?

Once a credit score slips below 500, it enters a higher-risk category.

This doesn't mean you can't get a loan, but it does mean:

• Higher interest rates.
• Increased scrutiny of your finances.
• Fewer lender options.

If you’re sitting near a credit threshold, the last thing you want to do is spray applications across multiple lenders and cause more harm.

Check out the article below for a full run down of what to expect, and how to get yourself back on track quickly.

​Read the full article here​