Many consumers assume that their bank or credit union will approve a used car loan request. If the consumer has banked there for many years, it’s a reasonable assumption to make.
Imagine the consumer’s shock when their bank or credit union denies an application for used car financing.
You or someone you know may be asking “What happens when my bank won’t approve a used car loan?”
In Part 3 of our in-house financing information series, we explore why in-house financing may be one of the best ways to get approved for a used car loan in today’s selective lending climate. A buy here pay here (BHPH) dealer is an easy solution to getting approved for a used car loan.
Why Was My Used Car Loan Application Rejected?
Not all banks and credit unions automatically approve their customers’ used car loan applications.
It may be difficult to understand the bank’s reasons. By law, the lender must provide the borrower with a written explanation about why it didn’t approve a request for credit.
Lender standards differ. Perhaps the consumer has a checking account with a commercial bank that doesn’t focus on customers that carry a low monthly balance. Or perhaps the consumer’s credit union is prioritized on making new mortgage loans.
How Does a Buy Here Pay Here Dealer Help Me Get a Used Car Loan?
The reputable buy here pay here (BHPH) dealer wants to help customers to get back on their feet after any type of financial difficulty.
If the customer has a discharged bankruptcy or he or she just fell behind on credit card bills, the buy here pay here dealer’s in-house financing option is invaluable.
That’s because the dealer’s in-house financing can help the consumer to rebuild credit without involving a bank or credit union. The BHPH dealer wants to work with you.
While your bank or credit union might have looked at just your credit scores, the BHPH used car dealer looks at your entire financial picture with the goal of giving you a second chance.
A used car loan from a reputable used car dealer can help you build or rebuild your financial future. That’s a valuable opportunity.
Understand the BHPH dealer may charge a higher APR for your used car loan. That’s because it takes a higher risk in providing in-house financing to its customer with fair, poor, or bad credit. If the buyer has no prior credit history, the BHPH can’t rely on the consumer’s willingness to repay the loan.
Although the BHPH lender may be viewed in a negative way, this is actually a short-sighted misconception. That’s because the dealer is willing to provide in-house financing to many good people who were rejected by their banks or credit unions.
If you or someone you care about needs reliable transportation to get to and from work, your BHPH dealer’s in-house financing option can help you build credit. (Note: Not all BHPH dealers report to the three major crediting reporting agencies. If you need to build or rebuild your credit, buy from a BHPH dealer that reports your timely payments to the CRAs each month.)
Purchasing a used car can help you build good credit. By securing in-house financing from your dealer and making each payment on time, your credit scores will improve. Good credit scores can help you enjoy dreams of home ownership and more accessible credit in the future.
What Should I Look for in a BHPH Dealer?
- Look for a dealership that offers in-house financing.
- Look for one who reports your monthly payments to the CRAs. Failure to report payments may be positive for borrowers who don’t make timely payments but it’s definitely a negative feature for those who want to rebuild their credit.
- Do your research. Go online and read reviews. Learn how long the dealer has been in business. A longer business history reflects good management and honest dealings within the community.
- When possible, plan ahead before you visit. Ask questions about their car inventory and financing charges. Look for a dealer offering a wide selection of pre-owned vehicles for you to choose from.
- Listen to your “gut” feelings. If you’re discussing a used vehicle and start to feel uncomfortable, don’t worry. Leave now. Don’t allow a salesman to make you feel pressured. Don’t feel that you must apologize about your credit.
- Look for an understanding, compassionate dealer. You want to do business with a respectful, reputable dealer.
How Do I Secure In-House Financing?
After you identify an honest dealer offering reliable cars with access to in-house financing, it’s time to discuss the terms and conditions of a used car loan.
The salesman, or its financing team representative, will discuss the vehicle cost, the interest rate (APR) of the loan, and the amount of your weekly, biweekly, or monthly payments.
Some dealers require the customer to make a weekly payment in person at the dealer’s office. To avoid surprise, ask your dealer about acceptable payment options. Request the dealer’s payment terms in writing.
Read the agreement carefully before you sign. When possible, bring an experienced friend along to help you understand the written agreement. Ask any questions about the dealer’s policies now.
Securing in-house financing is necessary for you to drive your new to you car home. Experience the pride of ownership and know that, as you get behind the wheel each day and make regular payments, you’re actually building your financial future.
What Are Some of the Advantages of In-House Financing?
There are at least eight advantages to buying a fine used car with in-house financing:
- You can take advantage of the dealer’s simple, on-site in-house financing approval process.
- The right buy here pay here dealership can help you to build your credit scores. It’s up to you to make timely payments as agreed.
- You can schedule an affordable car loan payment to match your pay day.
- Once you’ve paid your car loan in full, you’ll have a clean-title verified vehicle.
- A reputable dealer offers quality reconditioned, serviced, and computer-tested vehicles.
- A reputable dealer offers thoroughly inspected (e.g. ’92-point’) for quality.
- A reputable dealer may offer the customer no-cost benefits, e.g. a vehicle warranty package.
- A reputable dealer may offer the customer a valuable roadside assistance plan.
Why Should I Use Buy Here Pay Here Credit?
- We’ll help you to identify the right fine used vehicle.
- We’ll help you find a vehicle with affordable payments—our in-house financing experts consider your present financial situations (not your previous mistakes).
- Our “no-haggle” pricing model makes it easy to buy a great pre-owned vehicle.
- We’re committed to providing you with a reliable used car because it’s important for both of us to be satisfied.
- We’ll never pressure you about purchasing a vehicle you can’t really afford. We do our very best to help you find a car you love.
- When you take advantage of our in-house financing option, you receive our extended warranty package at no additional cost.
Learn More about In-House Financing
Shabana Motors offers in-house financing that’s matched to your ability to make affordable used car payments. Check out our extensive inventory of fine used vehicles now.
