There are both pros and cons to taking advantage of in-house financing options the next time you purchase a car from a dealership. Consider both the advantages and disadvantages of in-house financing carefully to figure out if it is the best fit for your financial circumstances.
Pro: Realistic Shopping
In-house financing does present a certain level of convenience to car shoppers. If you are planning on financing the purchase with the dealership you are buying from, most of the time your financial information will be handled first. This means the salesperson you work with will know what your budget is exactly before showing you a single car.
Pro: Bad Credit or No Credit
Dealerships that offer in-house financing are more willing to work with a lower or lacking credit rating in order to get you in a car you can afford, and they need to sell. Approved in-house financing with the dealership with get you in the car you need and provide a way for you to build or improve credit. The dealership benefits from this, as well, through the car sale profits and the profits garnered from the interest on the loan.
Pro: Afford a Better Car
Even if your credit and finances allow you to pay cash for passable used car, in-house financing can get you behind the wheel of a newer, more comfortable, and better looking car. The first requirements for a car should be that it runs and is safe for you and your passengers. It is nice to know, however, that the car you purchased is a vehicle you can be proud of and will continue running for a while.
Con: Higher Interest Rates
On average, the interest rates available with in-house car dealership financing are higher than those found with more traditional outside lenders. There are ways to work around these higher interest rates, such as increasing down payments and paying above the minimum monthly payments. You should keep the interest rates in mind while negotiating the financing for your car.
Con: Sales-Pitch Financing
Some car shoppers are concerned that the sales pitch they are receiving at the dealership will get in the way of receiving a sound financing offer. While it is true that the dealership wants to sell you a car, they also want to make sure you can afford the payment schedule. To set this concern at ease, prepare yourself with research and strict budgetary guidelines before you begin shopping at a dealership.
The pros of in-house car financing at a dealership make the shopping process easier and benefits people with bad credit. On the other hand, the cons are easy to work around through pre-planning and realistic expectations.
