Auto Financing

It’s unusual, but at the Fresno Subaru Dealership 31% of our customers simply write a check for the entire price of their new Subaru, Mitsubishi, or used car.  Most of us would rather make payments.  Financing a car means borrowing money from a lender that is usually a bank, credit union or finance company.  Of course, if you have a rich relative you can borrow from them too, but paying them on time won’t help your credit score. 😉

Credit Scores

Credit Scores are like voodoo.  The three credit bureaus each have their own formula to determine the score that can affect you in everything from buying insurance or renting a home to getting a good rate on a home loan, auto loan or even being able to write a check!  Fair Isaac is the company that invented the credit score.  It’s the “FI” in FICO.  The three credit bureaus are Trans Union, Experian and Equifax.

Each bureau has a number of “auto credit score” versions, which are different from what you may see when you get your score free every month on your credit card statement or from some of the credit monitoring sites that give it to you for free.  The latter are sites use public information THEY can access (meaning it’s not complete) to guess at your score based on what they know about he voodoo formula the real credit bureaus use.  In online forums these are referred to as FAKO scores.  I have learned a lot about credit from these forums.  See the links to the right for access to them.  It has proven well work the 50 cents a day I pay to see my credit activity on a daily bases and the scores they show are always exactly the same as what lenders reveal to me when I apply or credit.

One last thing about credit scores. When you buy a car from me at the Mitsubishi and Subaru store in Fresno, if you apply for credit, you always get a copy of your scores from any bureau that we run.  Often we don’t run Equifax.  Most auto lenders don’t use them.  If you are applying for a lease or some special subvented interest rate from Subaru we may only run Trans Union. That’s the only bureau they use.  The auto version of your credit sore falls in a range that tops out at 900 while most “mortgage” or credit card scores top out at 850, so don’t be surprised if your score here is different than the one you’re used to seeing.

Useful sites about Credit

I subscribe to this service.  It is highly recommended as a resource.  Read the forums and ask questions.


I subscribe to this site myself.  It’s a little bit harder to navigate than the first one on my list, but I have learned a lot from these forums too.

The government which looks after us all and gives us nice things has required the credit bureaus to give you your your credit report once a year for free.  It can be a little tedious to set up an account, but after that it’s easy if you remember your user name and password.  When you set up your account you have to remember things like the name of a mortgage company you dealt with 20 years ago and other personal info so they make sure you are YOU.

Credit Pulls Database

This is one of the best, most golden moments of the internet if you ask me.  If you are on top of your credit so you know your real FICO score (not your free FAKO score) for each bureau, and you are looking to get a particular credit card, you can use this database to increase your chances of approval.  It is part of a forum that has a lot of opinions on it, so the forums are not as reliably vetted by experts as the first two forums I shared on this page.


You don’t have to put something in each field so if you put simply “shell” in the creditor field and select “California” from the drop down, you will see which credit bureau was pulled by Shell in which city and the results of the application.  Of course, individuals are self-reporting this information.  It’s not a complete record, just what others have posted about their experience.

Getting a Car Loan

Most people borrow money to pay for big purchases like a house, a car, an RV, a boat or motorcycle. This involves convincing a bank, credit union or finance company that you are creditworthy and capable of paying the loan back.

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A Discussion of Leasing

This is a video presentation of something I scribble out for customers at my desk.  Have a nice laugh at my handwriting and whiteboard skills.  The information presented about leasing vs. buying is solid.

Down Payment

The down payment probably originated as a way to avoid financing more than the car is worth.  After taxes and DMV fees, with no down payment you are financing about 110% of the price of the car.

What Do You Need to Bring to Buy a Car?

You do not need to have a driver’s license to own or buy a car, but whoever drives the car off the lot needs to.  We will also need to verify the identity of the person buying the car and that is usually done with a driver’s license.  This a requirement of the bank and the company I work for.  Also, I’m sure you would not want a car dealership registering a car in your name unless we could verify it was actually you.
This would be the card you keep in the glove box of your car.

The insured must to be one of the people on title of the new car – if you’re listed as “additional driver” on someone else’s policy, they usually have to be on the loan or you need to get your own auto insurance policy.  Every now and then an insurance company surprises me and will cover an additional driver buying a car in their own name, but that is rare.

The expiration date must be in the future and the effective date today or before

For credit buyers, full coverage is required.  Although most cars I sell, you would want full coverage; on a cash purchase your can drive away with liability coverage only

Why would a bank (lender) want proof of where I live after they just loaned me $30,000 on an object with wheels?  I’ll let you answer that question.  Many times, people with very good credit are asked to prove this.  The gold standard for proof of residence is a land based utility bill showing your name as the recipient at the address you listed as yours on the credit application and registration.  It needs to be no more than 30 days old and preferably not be past due.  Land based would include: City Utility Bill, PG&E or other power company bill, landline phone bill, or sometimes a cable bill.  A few lenders will take an insurance policy declaration sheet showing “garaging address” for the car, but if that’s all you have it could be difficult.
I have had customers with enough provable cash in the bank that they could buy 100 new cars for cash.  However, if they don’t have a monthly income, a bank will not lend them money that they have to pay back monthly.  If you have proof of a long, very positive credit history with a good mix of well managed credit including mortgage, installment and revolving debt, you may not be asked to prove your income.  Any thing less that that and you may be asked to prove your income.  This proof is the most recent paycheck stub from your W-2 employment showing your name and the “year-to-date” amount.  Again, this should be within the last 30 days.  Handwritten pay stubs don’t usually work.  Cash income can’t really be counted either, but if you desperate, some lenders will accept bank statements over 90 days showing regular deposits.

New Car Financing

Every car manufacturer offers its own financing.  Usually these are lenders who are at least partially committed to helping the manufacturer sell cars.  Often the car manufacturer is subventing the bank by “buying down” down the interest rate.   Subventive rates are the big “zero percent” a.p.r. sales you hear about at the end of a model yet.  The Car Manufacturer is paying the interest to the bank up front,  so your loan can be at 0%.

Every lender in the state will offer you great rates on a new car is your credit is good.  Currently, in 2016, you can even get “new car financing” on “newer” cars, like used cars models years 2010 and later.

Borrower Resources

Subaru Motors Finance