Mike
Radford,#2Consumer Suggestion
Wed, July 21, 2004
These "preapproval" ads are deceptive. The companies that run them do not have anything to do with approving any loans and they usually don't even run your credit. All they do is collect your name, address, phone number, etc. and sell it to a car dealer. All advertising and promotional efforts by car dealers have ONE goal: to get likely car buyers to come to that *particular* dealer. Once he is there, in-person sales pressure can be applied, which is highly effective on many people. The difficult part is getting his confidence up enough so he will come through the door. The dealer was upset because the company had sold him the name of someone with terrible credit, but he still had a chance with you -- if they could sell you on the idea of a co-signer. So the dealer still wanted you to come in even though your credit was really bad. I suspect the lead generation company didn't even bother to check your credit because they knew the dealer would still want your name regardless. If you really were "preapproved" for a loan, you would get essentially a blank check from the bank, which you could take to any car dealer. Then you'd call the bank back with the exact details of the car you chose, and if it was within their guidelines for age and price, the bank will send the dealer the money. This process almost always gets you a better deal than having the dealer do financing. Financing and items related to it are highly profitable "back end" items that dealers will sell you.