Missing pay stubs are pitfalls for finance and insurance managers.
Finance managers don’t want to ask a potential customer to go home and get a couple of pay stubs to verify his or her income. That customer may not come back.
Even worse is the customer with a fake pay stub.
“It’s hard for a lender to lend $25,000 on a car without being sure that customer makes what they make,” says Lou Loquasto, auto finance vertical lead for credit reporting firm Equifax.
In fact, lenders and dealers need to be sure a customer can handle the payments, while safeguarding themselves from fraud. A dealer who submits false income, or housing payment, information for a car shopper may be guilty of bank fraud, warns Gil Van Over, the principal of gvo3 & Associates, a compliance consulting firm.
One way to guard against fraud is to inspect pay stubs. Van Over says that many of the online outfits that generate fake pay stubs for a fee produce poor-quality documents. For example, in a column listing pay along with such deductions as federal and state taxes and Medicare, the decimal points may not line up.
Another way is to use an income and employment verification service. At Equifax, which has offered that service since 2007, a spokeswoman said the auto industry has shown an “increased need” for this information in the last few years.
Equifax’s automated products allow an F&I manager to verify a customer’s income from the manager’s computer “real quick and send the customer on their way without having to go back home and get that pay stub,” Loquasto said.
Equifax Verification Services was updated this year to include auto insurance, address and rent information as well.
Equifax has employment information for nearly 55 million consumers, which the company says is updated directly from employers.
“We know exactly how much they make, how long they’ve been on the job. That takes one of the nastiest processes in auto sales and auto lending and just automates it,” Loquasto says. “The information you get is more accurate because it’s straight from the HR department at the company. It’s real data.”