The Definition Is Evolving

What is scratch and dent exactly and why is it something I need to familiarize myself with?  It refers to a number of different things, which I am going to list out for you.   There are also some additional terms that are lumped into this category, which I will also share with you in this article.  Without waiting any longer, let’s jump in and go over it all.

What Does Scratch and Dent Mean?

The term is generally used to describe products for sale that have some form of damage.  You might consider scratch and dent appliances for sale, for example.  It refers to those that have slight damage to them, often virtually unnoticeable, but keeps the said product from being in new, pristine condition.   The term can also be used to virtually any consumer product.

In recent years, the term scratch and dent has been attached to home mortgages and other loans.  It can mean there are deficiencies with the loan itself.  The term has been stretched a little to now include low credit score applicants that fall just short of scoring requirements, loans with documentation deficiencies, and loan payments that have been late at least twice in the last six months. 

Additional Terms Used

Many times, the actual term scratch and dent is used very liberally and not just to describe cosmetic imperfections on the product or deficiencies with the service.  In the list below, I will share with you some of the additional items that are often lumped into the catchall phrase.

Refurbished/Reconditioned:  Many retail sellers like to lump items that have been refurbished into the category of scratch and dent, particularly during a sales event.

Repaired:  This refers to an item that needed repairs to be made to be fully functional or visually appealing.  This is also often put into the same category.

Customer Returned:  Especially in a retail setting, items that have been returned are often discounted and are included in the sales using the catchall phrase.

Used:  Secondhand items are often lumped into the same category from commercial sellers.

Discontinued:  Even though they might be cosmetically perfect and new in the package, discontinued items often get lumped into the same category, as retailers have found it a catchy phrase to use to drive sales volume.

Display Models:  Even when there is no visible cosmetic flaw, they are often lumped into the same category.

Benefits of Buying Scratch and Dent

There are only a few main reasons to consider any sort of tangible item that have damage on them.  The single most obvious reason is price.  You will generally find steep discounts and clearance pricing on anything that has this tag attached.  Sellers will often sell the items with full warranty, making them more appealing.

Drawbacks of Buying Scratch and Dent

There are pros and cons to everything and this is no different.  Since the term has expanded and become a catchall of sorts, you could actually be buying a used or repaired item.  You have to use caution when you shop for products this way.  The main drawback to lenders using this term is the higher rate of interest.  Since the term clearly signifies damage and deficiency, it is easy for the lender to justify a slightly higher APR.

Scratch and Dent Trends

In more recent years, manufacturers have dedicated large portions of their sites to scratch and dent customers.  Computer manufacturers, appliance makers, and vacuum companies have started to cater to customers demanding discounts this way.

The term continues to expand as it pertains to services and products.  Lenders are expanding it to include virtually any loan with a deficiency and retailers are using it as a slogan of sorts to increase perceived value and discounting.

Now you have an idea what scratch and dent means.