In this three-part post, Shabana Motors addresses everything you’ve ever needed to know about in-house financing.
If you have bad credit or no credit, you may have many questions about how to find a dealer who’s willing to help you get approved for an affordable used car loan with a low down payment.
That’s good. Information is power.
In Part 1, we answer several basic questions about in-house auto financing, your credit quality, and some of the benefits of using in-house financing to buy a new to you vehicle.
What is In-House Financing?
When you’re in the market for a great used car, you may have access to in-house financing. If you’ve got bad credit, or you’ve got a discharged bankruptcy, you may benefit from in-house financing at your used car dealership.
Ask your used car dealer questions like, “How likely am I to get approved for in-house financing?”
You’ll be positively surprised when your car dealer’s in-house financing arm gets you approved—and you drive away in your new ride the same day!
What’s the History of In-House Dealer Financing?
When the U.S. economy tumbled about 10 years ago, lots of consumer credit scores suffered. Many were left with poor credit scores.
Many dealers wouldn’t lend to these consumers because they were viewed as high-risk borrowers. For that reasons, these customers had few viable financing options.
In-house dealer financing became popular in the aftermath of the Great Recession. Used car dealers with a desire to help people with bad or fair credit could guarantee used car loan approval to their customer as long as he or she had sufficient income to make their used car loan payments.
Used car dealers offering in-house financing will request the customer’s:
- Proof of income
- Local residence history
- Ability to make a reasonable down payment
In this way, the in-house financing option makes getting a used car loan quick and simple.
Start by completing an online car loan request and we’ll connect you with our used car sales team. Our financial team will assist you in figuring our your budget, and they’ll help you identify an affordable used car that meets your needs and fits your lifestyle.
What Are the Benefits of Using In-House Financing?
The short answer to this question is: There are so many reasons to use in-house financing from your used car dealer.
Thousands of customers have chosen this type of used car financing. They’ve experienced the following immediate benefits:
- Realistic vehicle shopping. Traditional car dealerships offer standard leasing and auto loan programs prioritize the customer’s selecting a vehicle first and figuring out financing options later. Ideally, in-house financing starts by answering the question, “How much vehicle can you comfortably afford?”
- Total budget analysis. An in-house financing team helps each customer to figure out budgetary matters first by determining your monthly payment.
- Affordable vehicle selection. Then, the used car dealer’s sales team helps the buyer to find an affordable vehicle. After the buyer obtains approval for in-house financing, it’s a breeze to look at the best cars, SUVs, or trucks—and drive away!
What’s the Effect of Credit on In-House Financing?
The good news is that no credit or even bad credit won’t stop you when in-house dealer financing is available.
However, no credit, fair credit, poor credit or bad credit costs more.
It’s up to the prospective buyer to check his or her credit before shopping for a fine used car. Take these steps when time permits:
- Request copies of your Experian, Equifax, and TransUnion credit reports.
- Check each report for errors, including the spelling of your name and/or your correct address.
- Report each error to the specific credit-reporting agency in writing. Submit supporting documentation to Experian, Equifax, or TransUnion regarding the error.
- Wait 30 days. Check the credit reporting agency/agencies to see if the correction has been processed.
The Federal Trade Commission (FTC) says that many consumer credit reports contain errors. By checking your credit reports and requesting corrections before you shop for a used vehicle, many consumers can improve their credit scores.
Good or excellent credit can save you money on the cost of your used car loan. If your credit is fair, poor, or bad, or if you don’t have credit, consider a co-signer. Your co-signer’s good or excellent credit can help you save money on in-house used car financing.
Does Your Buy Here Pay Here Dealer Offer Special Promotions?
Your dealer may offer special deals to customers who take advantage of in-house financing.
For example, your dealer may offer a warranty to buyers who choose to finance in-house.
If you select a third-party lender, e.g. your credit union or bank, you may be ineligible for these valuable offers.
Before making a decision about how to finance a used car, it’s essential to weigh your financing options.
Are There Disadvantages to In-House Financing Offers?
In-house dealer financial is often easy to get. Many customers say that’s the best reason to use it.
However, there may be disadvantages for some customers, including:
- Higher finance costs. If you have bad, poor, or fair credit scores, in-house financing may cost more.
- Payment options. Not all used car dealers offer online payment options. You may be required to make payments in person at the dealer. If you don’t work or live nearby, making payments can cost time and energy. Ask before you buy!
- Credit scores and rebuilding credit. Some used car dealers’ in-house financing doesn’t include credit-building. Ask your used car dealer’s financial professionals if they report timely payments to the three credit-reporting agencies: TransUnion, Experian, and Equifax. If they don’t, and you’d like to rebuild your credit with a used car loan, this dealer might not offer the best option for you.
If the dealer doesn’t perform a credit check before it approves your used car loan, it might not be compelled to report to the three major credit reporting agencies. Your on-time payments might not be reported.
That’s a costly issue for many consumers.
What Should I Look for in a BHPH Used Car Dealership?
Not all buy here, pay here dealers are alike.
Look for a BHPH dealer who will:
- Work with you. Your BHPH should offer transparency. If your current credit or previous discharged bankruptcy is preventing you from buying a new ride, look for a used car dealer who will. You need a BHPH dealer who’ll help you establish an installment loan: you need both revolving credit, e.g. credit cards, and installment credit, e.g. a used car loan, to rebuild your credit scores now.
- Offer payment options. Select a BHPH dealer with an online payment option if that’s your preference. If you’d like the dealer to arrange automated payments by making direct debit withdrawals from your payment account, look for a BHPH dealer who wants to make payments convenient for you.
- Reports your payments to the three CRAs. If your used car dealer doesn’t report your payment history to TransUnion, Experian, and Equifax, you’ll need to find another way to rebuild your credit scores.
Shabana Motors helps Houston drivers with fair, poor, or bad credit to get approved for a used car loan.
If you’re serious about re-establishing your credit and getting a reliable used car, get started now.
