Sound too good to be true? It should, because it almost always is. Unless you have REALLY good credit, those pre-approvals you get in the mail for auto loans are bogus. There is typically 2x-3x as much text in the disclaimer area of the mailer than there is on the main advertising area.
"You're pre-approved! Come pick out your car!"
Common lines in the disclaimer of these “pre-approvals”:
- Subject to Lender Approval (I thought you were pre-approved???)
- Payment cannot exceed 10% of your monthly income.
- Monthly debt to income ratio cannot be over 40%.
- Employment and residence information must be verified by lender.
- No Self Employed.
- Vehicle must be newer than 2004 and have less than 50,000 miles.
- Down Payment may be required.
- Down Payment and Interest Rate may vary.
- Up to 30% down payment may be required.
I may be missing a few, but you get the idea. They can always find a way out of it. The car you pick out probably will not work for your loan. Then the dealer has to switch you to a vehicle that they can actually get you financed on. The pre-approval is simply a tool dealers have been using for YEARS to get people in the door and, surprisingly, it still works on a lot of people.
Why am I getting auto loan pre-approvals in the mail?
It is really simple. Your name is on a list. Some lists you can get taken off (like the ones that the credit bureaus sell) and some lists you cannot because the list is public record (like the lists advertisers use for Bankruptcy Auto Loans).
If you are on a credit score list, or credit filter list that Equifax, Transunion, and Experian sell to advertising companies and creditors, there should be a spot in the disclaimer that allows you to Opt Out of future mailings. Call the number and opt out. You will get a lot less junk mail.
If you recently filed for bankruptcy, especially if you filed Chapter 7, I have bad news for you. You are going to get a lot of solicitations in the mail for the next year or so and there is very little you can do to stop it. Auto loans (fastest way to rebuild credit), secured credit cards (not horrible), high fee credit cards (bad), credit repair (not a bad idea), and other offers will all be sent to you. The vast majority will come over the first few months, and it will taper out over time.
Since bankruptcies are public record, almost everyone has access to the data. You can call the people that are sending you advertisements and ask them to stop but, in most cases, it will not work. They do not purposefully keep re-mailing you, and they are not trying to be malicious. The advertisers the creditors and dealers hire usually pull new bankruptcy lists based on your bankruptcy filing date. Since you cannot take yourself out of the bankruptcy records, your name will keep popping up on their mailing list filter.
So who do I trust?
Just like any other transaction in life, you have to decide where you choose to do business. If you are considering a secured credit card, there are several reputable places online you can find with interest rates between 9% and 12%. Your limit will not be very high, because it is based on how much money you deposit with them, but it is a start.
If you need a car loan to rapidly rebuild your credit, or if you just need a car, you might consider skipping all the people that send you the “pre-approvals” in the mail. If they need to send you misleading advertising to get you to visit them in person, you do not need to do business there. At WA Auto Credit, we do not send out pre-approvals. Our customers are intelligent enough to see past our competitors’ fine print and prefer to be told the truth. The answers you get from WA Auto Credit may not be what you were hoping to hear, but you can be confident we are telling you the truth when it comes to your auto loan.