What Is With Approved Credit (WAC)?

With approved credit, or WAC, is a type of advertising qualifier that indicates a particular financing offer is contingent on the buyer having adequate credit. The measurement of credit is through credit rating, income, and employment factors.

This statement often appears in the small print in car ads highlighting a lease or loan plan with a specific down payment and monthly payment. As the fine print explains, the offer is only available for buyers with a certain credit rating.

Key Takeaways

  • With approved credit (WAC) is a way for advertisers to list terms that not all potential customers match, which in this case is credit.
  • Sellers will run a potential customer's credit report to determine if they meet the criteria for the sale of financing.
  • WAC is often seen in lending-based businesses such as home purchases or more commonly in car sales.

Understanding With Approved Credit (WAC)

With approved credit is a legal qualifier which protects a merchant from accusations of bait-and-switch policies. Bait-and-switch is the practice of offering one product or service to attract customers which is not available. Bait-and-switch tactics are considered fraudulent and a violation of consumer laws, and are one of the fastest ways to lose consumer trust.

Examples of reasons to deny include low credit ratings, income not meeting defined criteria, and no length of work history. Factors that cannot be considered include race, gender, and age.

Since loan and lease offers are generally contingent on the buyer’s credit rating, many potential buyers will likely not qualify for the advertised terms. By making the offer contingent on approved credit the merchant cannot be accused of fraud, assuming the advertised offer is genuinely available for credit-worthy buyers.

To determine if a customer meets the merchant’s standards to qualify for the advertised loan or lease rate, the merchant will run a credit check on the potential buyer.

On approved credit, sometimes called OAC financing, is also a practice used in promotional materials for home loans, credit cards, and store credit. Other factors investigated include annual income and work status. Customers with the best credit ratings will get the most beneficial financing options.

Special Considerations

One problem for consumers is that there is no single standard for determining what constitutes approved credit. Merchants are free to establish any level of credit-worthiness they desire, although most will balance risk mitigation with a desire to make the sale. However, to avoid charges of discrimination, the merchant must be consistent in basing decisions on financial factors.

Even though the term with approved credit is somewhat vague, buyers are protected by specific consumer law. Americans have a right under the Equal Credit Opportunity Act (ECOA) to know why their credit application was not approved. The answer to a customer's question cannot be vague and must be more than stating the applicant did not meet the standards but must specify a reason. Examples of reasons to deny include, low credit ratings, income not meeting defined criteria, and no length of work history. Factors that cannot be considered include race, gender, and age. Also, the receipt of public assistance should be part of regular income for recipients.