Notorious drug-dealer-turned-car-dealer Ethan Gaines has returned to our pages with one mission in mind: to share forbidden knowledge with auto enthusiasts whose lives haven’t exactly followed a straight and narrow path. In Part Two, Ethan meets that rarest of creatures: the person with a sub-400 credit score and an S-Class-sized set of expectations. Read Part I here.
It was just another phone call:
“Hey I saw y’all have a S550 over there.”
“Yes sir I have a few of them available, which one in particular were you looking at? Do you have a stock number?”
“Nah man, it was that black one with the rims y’all had out front.”
“Yeah the ‘08 on the Giovannas. How can I help you with it?”
“Yeah, so how much I have to put down to get that?”
“Down payment and monthly payment numbers depend on your credit history.”
“What y’all need from me too see what’s up?”
“Just go online to our website [REDACTED].com and fill out the financing application on the main page. I’ll give you a call once we get a chance to check it out.”
I logged into Dealertrack about 15 minutes later to see if the gentleman had sent over what I needed. He did, but I wasn’t prepared for what happened next. When I clicked the button to pull his credit report, the score number generated didn’t even compute with me: 376. 376!. I called Jason into the room:
“Yo, J! Remember dude that called earlier?
“Yeah, What about him?”
“Look at this.”
Jason stared at the screen. I can’t tell you what he said, not in a family publication. Maybe not even in a non-family publication. We both understood that it wouldn’t be worth our time to call this dude back. Then he asked an important question:
“How the f*** does somebody even let it get that bad?”
That’s a question I hear all the time when I discuss consumer credit with my friends. A lot of my, ah, less street-savvy friends don’t have any notion of how credit works—they just know that they never ask for any money they can’t pay back, and the bank never says no when they ask. The concept of someone not paying creditors is lost on them because they’ve never been in the situation. And yet plenty of people are in that situation. According to Experian, in 2019 12% of Americans had a beacon score in the sub-550 range. So it’s within reason to say that at least one person you know is a credit criminal.
The fact of the matter is most people this far down the totem pole have no clue how bad their credit is either. They don’t check it, they don’t know what lines are on it, they don’t even know who the three bureaus are. Sadly we live in a world where those three bureaus, and the three-digit scores they hand out, could define your whole existence.
When you relate this to buying cars it blows up even bigger, because that $0 down, $300 a month advertised car payment turns into $2000 down and $500 a month real quick for these customers. It’s often hard for them to understand why they’re being shown a deal that looks so much worse than what they see in a newspaper or on television. I’ll break down an example that I’ve run into multiple times.
At one of the Nissan stores I worked at, I had a young woman come to look at a cheap used Sentra we had on the lot. We went through all the normal motions on the road to the sale. I asked her what we call a “discovery question”: “How do you feel about your credit on a scale of 1-10?” She replied with an 8. We ask the discovery question because it’s illegal, and flat-out unethical, to run people’s credit without their approval.
(A side note about that: Just because it’s illegal and unethical doesn’t mean it doesn’t get done. That dealership that asks for your drivers license during your test drive? The worst of them will do a “Triple hit” on your credit right then and there. They’ll run a fake app past three banks. Then when you go to another dealership for credit, the banks will see you’ve already “applied” and been “turned down”. Banks are funny about accepting deals like that. So the next thing you know, you’re back to the original dealer, because they’re the only ones who can you get financed. Do that often enough as an F&I (finance&insurance) manager, and you can go to jail—but the Attorneys General in most states don’t really care enough to pursue it.)
Taking the customer at her word, I assembled payment options based on rates available to high-600 scores. She agreed to one of them. Then we submitted her credit application…
When I sat back down across from her I had a plethora of questions, but first I laid her risk-based credit info in front of her to sign. I started my spiel:
“This is your risk-based credit information from Equifax, it just shows your score here-“
“That’s good right?” she said excitedly.
The score on the paper was 413. I didn’t know if I should’ve laughed or just politely kicked her out of the dealership. I decided to not answer her instead and moved on through my set:
“This part shows what percentile of Americans have a similar credit score to you. Then I just need your signature at the bottom there.”
Three hours and four potential co-signers later, she was signed up on a new Sentra. One of those hours were spent explaining to her that 413 wasn’t a good score and explaining how her credit managed to be so bad. She was lucky to have a grandmother who was willing to expose herself to the less than ideal situation.
We live in an age where credit information is readily available on the internet. Spare yourself the grief before you step into the store and educate yourself about what is on your credit report. If your credit is on the lower reaches of the spectrum prepare yourself for a few things:
● Expect to put money down. The more you can bring to the table the better.
● Try to find a person with stronger credit to co-sign for you before you go. In really desperate situations, the banks may not let you be on a loan at all and may ask to let the co-signer go alone. Prepare for this specific request, especially if you have any repossessions on your credit report. It can have implications on how you title and insure the vehicle.
● Be upfront and be patient. Let the salesman know early in the process what your credit is like. Not only will it save time, but it will encourage the sales manager to be more sympathetic to your situation.
All said, don’t fear the dealership just because your credit isn’t exactly great. Just make sure you do a bit of research and educate yourself on what it all means. And no matter what your credit score, a little self-reflection before you hit the dealership is valuable to you. Think about how much you can really pay for a car. Don’t forget to include repair, consumables, and insurance. It’s possible for a customer with good credit to step into something they can’t really handle. In fact, that’s how most people end up with bad credit. There’s only one thing worse than knowing you can afford an S-Class and having the bank disagree—and that’s when the bank thinks you can afford an S-Class but it turns out that you actually can’t.