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Recently, I purchased a car from a Hyundai dealership and signed to finance through Hyundai Motor Finance during the rebate promotion period.  A few days later, I received a letter from unidentified bank regarding a car loan application for the car purchased.  The loan was applied by the dealership.  
I contacted the finance manager at the dealership to verify the loan process.  He explained the process as following.  “The dealership’s loan process is to run 2 additional loan application before the final financing through Hyundai Motor Finance.”
Has anyone experience a case similar to mine?  This is very suspicious and violation of the contract exposing personal info.
Any idea?  Thank you,

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It's sleazy. It's also routine. If the rate and terms of the financing are the same from this third party as you would have gotten from Hyundai directly, I wouldn't worry about it.

Most likely, they did one hard pull of your credit and used the information they found to shop you around to different financing providers.

As for whether you can sue them... unless they pulled your credit multiple times or caused you real harm in terms of contributing to you becoming an actual victim of identity theft, I don't think you have any damages that you could collect on. But I'm not a lawyer and maybe someone else is more creative and inventive than I am.

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Go to CreditKarma.com and see how many times they pulled your credit.

Once, well nothing you can do without lots of money spent on your part and lots of time.
Multiple? Well I'm sure there are a few lawyers out there to go after them.

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I'm pretty sure the dealer's lawyers have buried somewhere in the fine print that they'll send your info to bunch of other lenders so when you signed on that dotted line, you gave them the authorization to do so.  This is very typical by the way, the dealers deal with a bunch of lenders and enter the customer's info in the dealer portal (I forgot the name of it) which blasts out the loan app to bunch of lenders.  Whomever gets back to the dealer fastest with the most kickback $$ get the deal.  Any lender that received your loan application information is required to send you related loan disclosures regardless of they gave you loan or not. 

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This is normal. When you applied for financing the finance guy checked all the rates for a few lenders. It's not a given you would qualify for the Hyundai subvention rate.

You will only have one hard credit pull. The credit report will show multiple, but it only counts as one

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While AaG12 is correct by the text books, the real world is very different. At different times, I have dealer financed two cars with the dealer. In each case, the dealer ran my credit before talking to me. He then shopped the loan paperwork with a half a dozen possible lenders. I ended up with a half dozen hard pulls spread over the three credit bureaus. The hard pulls were on my credit for two years.

Your case may be different because you indicated finance through Hyundai Motor Finance during the rebate promotion period.. Look your paperwork over to see what guaranteed your financing was going to be through Hyundai Motor Finance during the rebate promotion period. I wonder if the rebates are given to the dealer separately from the financing. Was there a requirement that the financing be via Hyundai Motor Finance in order for the rebate to apply. IF yes, then you may have a bait and switch case via your state attorney general.

Usual disclaimer: I am not a lawyer nor do I play one on TV.

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"Looking for new credit can equate with higher risk, but most Credit Scores are not affected by multiple inquiries from auto, mortgage or student loan lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on your credit scores."

http://www.myfico.com/credit-education/credit-checks/credit-repo...

Just like a mortgage, a bunch of hard inquiries for same type of credit (e.g. auto, home, etc.) are treated for scoring purposes like one. The credit bureaus do so to NOT penalize rate shopping.

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When you seek credit you create Permissible Purpose to pull your credit under the Fair Credit Reporting Act, which says nowhere that there is a limit to the number of financing options a dealer can explore.

https://www.transunion.com/client-support/permissible-purpose

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.. (double post)

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otaymiester said:   When you seek credit you create Permissible Purpose to pull your credit under the Fair Credit Reporting Act, which says nowhere that there is a limit to the number of financing options a dealer can explore.

https://www.transunion.com/client-support/permissible-purpose

  Only if you authorize the dealer to "shop around" for credit.  By your logic, the dealer could go apply for a HELOC loan too.  

I'd never sign anything authorizing the dealer to seek credit from multiple sources.  Most people sign whatever paperwork is put in front of them without reading though.

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Bend3r said:   
otaymiester said:   When you seek credit you create Permissible Purpose to pull your credit under the Fair Credit Reporting Act, which says nowhere that there is a limit to the number of financing options a dealer can explore.

https://www.transunion.com/client-support/permissible-purpose

  Only if you authorize the dealer to "shop around" for credit.  By your logic, the dealer could go apply for a HELOC loan too.  

I'd never sign anything authorizing the dealer to seek credit from multiple sources.  Most people sign whatever paperwork is put in front of them without reading though.

  
The dealer can seek financing from as many lenders as it wishes for the specific credit transaction for which it was given permissible purpose under the FCRA.  In this case it would be to finance a car.  

Nothing in the FCRA requires written consent to pull your credit, either once or 800 times for the same permissible purpose as defined by the statute.

Post a link to the relevant section of the FCRA which contradicts what I'm posting if you wish to disagree.

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I wasnt contradicting what you said.  If you give them permissible purpose Then they can.  I personally would not sign a generic financing form giving them that propose. If I were going for the automaker finance through dealer, it would have a condition added that that was the only allowed. If dealer doesn't agree to modified form then I would walk out the door and the "finance guy" would run out after.

I brought my own financing when I bought, signed no such form authorizing any credit seeking, no credit ran by dealer. No permissible purpose, no credit transaction sought from dealer.

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I just bought a car last week and ran into this exact problem. I am OCD about my credit and so I have all the monitoring sites and can tell you that yes, the bureaus do say publicly that they will not penalize you for loan shopping. The process the dealers use is called shotgunning. And this all works perfectly, in theory. In practice, the bureaus rely on inquiry codes (specifying what type of credit you're seeking, in this case auto) to determine whether or not inquiries are related.

You could apply for a Capital One auto loan and a Capital One credit card, and those are legit two separate hard pulls because they would have different inquiry codes. In this case "Installment Account, Auto" and "Revolving Account, Bank". But if a random third party lender (and there are a lot of them) doesn't take the time to specify the right code the inquiries are considered separate even though they are related and are held against you when calculating credit scores.

For example, if Jim's Financing decides to pull your credit with information you provide in an auto loan, but specifies the wrong inquiry code -- one I see misused is "Personal Loan, Other, Non-Bank" -- that inquiry will count separately from everything else and you take the ding.

What's really awful here is that this is unethical, lazy on their part, and illegal. The only recourse is to separately contest each inquiry with the wrong code for each bureau. If a dealer shotguns you to five lenders and they each pull all 3 bureaus, that's 15 separate challenges you have to write, file, track and follow up on for months with no promise that they will be removed or worse, come back Verified by Subscriber.

I mean everyone's got nothing but free time on their hands, right?

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apathy2 said:   I just bought a car last week and ran into this exact problem. I am OCD about my credit and so I have all the monitoring sites and can tell you that yes, the bureaus do say publicly that they will not penalize you for loan shopping. The process the dealers use is called shotgunning. And this all works perfectly, in theory. In practice, the bureaus rely on inquiry codes (specifying what type of credit you're seeking, in this case auto) to determine whether or not inquiries are related.

You could apply for a Capital One auto loan and a Capital One credit card, and those are legit two separate hard pulls because they would have different inquiry codes. In this case "Installment Account, Auto" and "Revolving Account, Bank". But if a random third party lender (and there are a lot of them) doesn't take the time to specify the right code the inquiries are considered separate even though they are related and are held against you when calculating credit scores.

For example, if Jim's Financing decides to pull your credit with information you provide in an auto loan, but specifies the wrong inquiry code -- one I see misused is "Personal Loan, Other, Non-Bank" -- that inquiry will count separately from everything else and you take the ding.

What's really awful here is that this is unethical, lazy on their part, and illegal. The only recourse is to separately contest each inquiry with the wrong code for each bureau. If a dealer shotguns you to five lenders and they each pull all 3 bureaus, that's 15 separate challenges you have to write, file, track and follow up on for months with no promise that they will be removed or worse, come back Verified by Subscriber.

I mean everyone's got nothing but free time on their hands, right?

  Thanks for sharing the experience.
I had good luck doing direct dispute through Credit Karma on some incorrect information. They only do two credit bureaus, but it might save you some time anyway.

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AaG12 said:   This is normal. When you applied for financing the finance guy checked all the rates for a few lenders. It's not a given you would qualify for the Hyundai subvention rate.

You will only have one hard credit pull. The credit report will show multiple, but it only counts as one

Not always.  I was dinged with THREE hard pulls on one day from the same dealer when I bought my last car.  It has to do with how the salesperson pulls reports.  I was mighty pissed off when I found out.  It only dropped my score a few points but it was annoying.

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clangle said:   
AaG12 said:   This is normal. When you applied for financing the finance guy checked all the rates for a few lenders. It's not a given you would qualify for the Hyundai subvention rate.

You will only have one hard credit pull. The credit report will show multiple, but it only counts as one

Not always.  I was dinged with THREE hard pulls on one day from the same dealer when I bought my last car.  It has to do with how the salesperson pulls reports.  I was mighty pissed off when I found out.  It only dropped my score a few points but it was annoying.

  
The three hard pulls only count as one for purposes of calculating your credit score. So essentially, your score drop would have been the same had they done three pulls or one. That's what the credit bureaus say anyway.

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