For people with no credit or bad credit, there aren’t always a lot of options for financing a car. One way that some high risk people are able to get a much-needed loan is through in-house financing. However, the benefits aren’t solely for those who have an unsavory credit profile. If you’re ready to purchase your next ride, here are five benefits of in-house financing.
You Are Not Simply a Number
It can be frustrating to always be judged based on your current credit score. People don’t know what happened, or how you ended up in the situation you’re in. You also may be making huge strides to create a better financial picture for yourself—but anyone who has done it knows it takes time for your credit score to improve.
Dealerships that offer in-house financing look at you as more than a number. While your credit score may affect what they are willing to finance for you, they are also going to look at your job, residence, any improvements you’ve made and other factors. Not only can it get you into a car, but for people who have decent credit standings and have proven that they have made changes in their financial habits, they also may be able to get better interest rates than they would from a traditional lender.
A More Efficient Approach
At most dealerships you’re going to wander the lot and look for vehicles you like. In many ways this is a backwards approach. It’s easy to fall in love with something outside your price range, or waste time being told no over and over again. With in-house financing, you’ll get your approval and budget effectively in place from the get-go. Once you have your limits, then you can go find a car you can afford.
The Ability to Negotiate
There is a lot of freedom working with in-house financing—and better yet, you’re face-to-face and able to muddle through the possibilities. A good example of what you could negotiate is payments. Maybe you’re not able to gather a 20% down payment but can still afford a higher monthly payment. Maybe it’s the opposite—it’s easier to pay more up front and have a lower payment installment. The bottom line is at least you have a little power when working with in-house financing.
Develop a Relationship
Sometimes car dealers get caught up in the sale and not the person. When you’re using in-house financing, the dealer is basically saying, “Hey, we are going to be around for awhile.” That kind of relationship can have wonderful perks, like earning trust and getting a better loan the next time around. It also means they’re investing in you. It’s grounds for a long-term partnership if everyone puts forward their best effort.
Build Your Credit
One thing that stands in your way when you have bad credit is the ability to improve it. If you’re denied loans and credit cards, how can you start rebuilding your reputation? In-house financing is a great way to get a loan with less than stellar credit or no credit, and if you pay on time and prove yourself, your overall credit resume starts to improve.
In-House Financing 101
Let’s say you’ve read this far and are intrigued by in-house financing, but still wonder exactly what it is. It’s pretty straightforward—in-house financing is dealerships that finance a loan for you to buy a car from their lot. No banks, instead the dealer is your lender. The application process is similar, and you’ll want to have a few things with you when you apply for in-house financing. They are:
- Photo identification
- Proof of income
- Proof of residence
- Anything that supports your ability to buy a car
- Call beforehand and see if there is anything else the dealership requires
It’s not always easy to be a high risk lendee or someone who wants a better rate, but in-house financing may be the ideal solution for you.
