For years, some dealership staffers have filled out or helped fill out customers' credit statements, believing this validates the information provided to lenders.
In many cases, the credit statement is filled out by either the salesperson or finance manager, who use this time to build rapport and get to know the customer. Although many dealerships may still do this, it's not a wise practice.
Sales and finance managers admit that dealership staffers have been known to alter or embellish information on a customer credit statement to assist in getting the deal approved.
For instance, the salesperson may alter the customer's income (by $500 or more) or may change job descriptions or time on the job, just to get the deal on the road.
It doesn't take a salesperson long to figure out that the more income a customer demonstrates or the greater the length of time on the job stated, the greater the chance that the deal will be approved.
The salesperson may think: “What's a few hundred dollars, what's a couple of months, and who will know the difference anyway? No big deal.”
Sometimes, when the deal makes it to the finance office, the finance manager determines that it lacks sufficient income or time on the job for approval. The salesperson may be told to change the information or the deal won't go through. (The finance or sales manager does not want to get caught doing it!)
A problem with altering the customer's income: it's illegal.
The lender has the right to make a final call on the deal based on accurate information. To mislead the lender into believing the customer makes a certain income or has so much job longevity in order to get a deal approved isn't the way to go.
The customer should always fill out the customer credit statement, in their own hand, to validate that the information was not altered by the dealership.
If, for any reason, the customer stops making payments, the lender will contact the customer. The lender will review the customer credit statement with the customer and ask if the income reported was accurate. The customer will generally tell the bank the truth (for fear of retaliation), often saying that someone at the dealership altered the income or time on the job.
Dateline NBC aired a report about an investigator who posed as a customer and was aided by the finance manager in altering stated income to get the deal approved. The incident occurred on video! It embarrassed the dealer.
Should the customer not pay on the loan, the lending firm will try to get its money one way or the other. If it is determined that the credit statement was altered by the dealership, the dealer will either have to sign full recourse or, worse, pay off the loan. Some dealers insist that a salesperson would not intentionally alter a customer's income; perhaps he or she misunderstood what the customer said. The dealer will still lose and will most likely have to pay off the loan or sign full recourse.
The Federal Trade Commission stipulates that the dealer is responsible for safeguarding the consumer's personal information and making sure it is secure from malicious activity, such as altering the customer's personal information. Credit fraud is a serious crime, punishable by imprisonment. The federal government treats it seriously. Altering customers credit statements or personal information just to get a sold car on the street is unwise and short-sighted.
The best way to avoid complication later is to make it a point for the customer to complete their own credit statements. If a problem subsequently arises, the customer would be the one explaining the discrepancy to the lender, not the dealership.
Rebecca D. Chernek is president and CEO of FYIFI Inc., specializing in F&I sales and management. She can be reached at [email protected]