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Apparently having good credit isn’t enough, unless you’ve already pledged loyalty to the debt system. (lemmy.world)

submitted 2 days ago* (last edited 2 days ago) by Camzing@lemmy.world to c/personalfinance@lemmy.ml

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Just went through a mess trying to finance a used car. I haven’t borrowed money since 2012, no debt, no credit cards, just living within my means. When I applied for a loan, I was told I was refused. Not because of bad credit, but because I hadn’t used credit recently enough.

The dealership advertises “no applications refused,” but apparently if you don’t have an active debt history, you’re too much of a mystery for the system.

Co-signer? Not allowed. Using my own bank account for payments? Denied. Their solution? Open a joint account with my dad just to satisfy a bank’s paperwork, pay hundreds in fees over 6 years just to make it work.

The credit system says you can't borrow money unless you've already been borrowing money, like somehow living within your means disqualifies you. It's not about good credit, it's about loyalty to the debt game. Screw you for standing on your own feet, I guess.

Just needed to get that off my chest. Anyone else run into this nonsense?

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[–] litchralee@sh.itjust.works 3 points 1 day ago (1 children)

Co-signer? Not allowed.

This is the part which confuses me the most. My personal experience has never come across any sort of lender which wouldn't allow cosigners. Sure, some means-tested home loans won't allow cosigners that don't meet the same means-test as the primary borrower, but they still permit and actively want qualified cosigners. As a matter of underwriting, adding a cosigner always increases the likelihood of collecting on a defaulted note, reducing risk for the lender. There's zero financial sense for a lender to not allow a cosigner.

I hope you found a different used car lender, ideally one which offers something more reasonable than a 72 month (!) term.

[–] Camzing@lemmy.world 1 points 1 day ago (1 children)

This is a dealership.

[–] litchralee@sh.itjust.works 3 points 1 day ago* (last edited 1 day ago)

I'm not sure if there's some detail I'm missing, but dealerships here in California and elsewhere that have in-house finance staff execute their work as loan agents for an affiliated-but-external lender (often a big-name bank). That is, the dealership themselves do not issue loans but if someone comes in without financing, the finance person can process a loan application with the dealership's affiliated lender on-the-spot to complete the car deal.

Thus, the dealership is primarily concerned with selling cars and shouldn't really care how they're paid for, whether fully in cash, financed through the affiliated lender, or financed through your own lender (eg already getting pre-approval through your credit union). Any marketing promise by the dealership of "no application refused" is likely hollow, since it's the lender that decides (with the rare exception of a dealership that genuinely lends on business credit).

Do people use outside financing for used cars? Absolutely! It's almost the bread-and-butter for credit unions to extend credit to their members specifically to buy used cars, because used car financing at dealerships is notoriously predatorial, due to being unable to "shop around" for a better rate. And credit unions have few qualms with offering loans to long-time checking customers that don't have a credit history. Credit unions in the USA are the closest thing we have today -- despite the word "credit" in the name -- to community banking, where "credit reports" are simply unnecessary and the needs of the members are paramount, tied together by preexisting, long-term social connections.