Do Car Dealers Run Your Credit When Paying Cash?

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Even with poor credit.

By

Automotive Content Editor

Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, Automotive Content Editor - April 1, 2022

Some car dealers may tell you it's required for them to pull your credit, even when you're paying cash for a car. If you don't need financing, there's no reason for you to allow the dealership to run your credit – though it likely won't do much harm. Here's why.

Do dealers run your credit for a cash purchase? Every credit check has the potential to lower your credit score anywhere from around five to 15 points. This is a normal fluctuation, and borrowers' scores can usually rebound quickly from it. However, if you don't need an auto loan because you're paying cash for your next vehicle, there's no reason to put your credit through the wringer.

Some dealers may attempt to get you to agree anyway, citing incentives or trying to see how much you qualify for so they can often make money from getting you financed. Others may go as far as wrongly citing the Patriot Act as a reason to pull your credit.

Rest assured, they can't just run your credit. According to Experian, federal anti-money-laundering regulations don't require dealers to run your credit on cash purchases. You might have to fill out additional forms, though, such as IRS form 8300, if you make a lump sum payment of more than $10,000.

Just because you can pay cash though, should you? There can be benefits to financing if you need to. In some cases, if the choice is between getting an older used car and putting a big down payment on a newer financed vehicle, weigh your options carefully to make the best decision for you.

Remember, if paying cash completely wipes out your savings, you won't have any backup if something unexpected happens to your vehicle, or it needs an expensive repair. In this case, consider putting down around 50% of the vehicle's price, and take out a small, short loan, so you don't deplete your savings.

Why pay cash for a car? If you can afford to pay cash for your next vehicle, congratulations! It's not always easy for borrowers to come up with so much money all at once, which is why financing exists. If you can pay cash there are a few benefits to look forward to such as instant ownership, no monthly payment, and no added costs in interest. This all adds up to saving and less stress. You can also skip the headache of a credit check.

The bottom line is that it's up to you whether or not the car dealership gets to pull your credit – they can't do it without your express consent. It's okay to walk away from a pushy salesperson who won't take no for an answer.

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, Automotive Content Editor

Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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