When you’re searching for a car, it’s always nice to dream about what you would get if you could afford it. However, bank terms and traditional financing often puts you on a strict budget—one that places a nicer car just out of your reach. One thing that’s often overlooked when you’re car shopping is in-house financing. When a dealership offers it, your instinct may steer you in the direction of what you’re familiar with. Before you say no, take the time to find out what in-house financing is, and see if it can get you into a nicer ride.
What Is In-House Financing?
In-house financing is exactly what it sounds like. It is the car dealership offering to finance your vehicle. Dealerships don’t work with the same set of rules that banks and credit unions do, and usually have a little more flexibility in how much and to whom they lend. Most of the time, the only criteria you’ll be judged on is your address and income. For many, it will be the only way you can get into a car. It is also a way you may be able to get into a nicer car.
The Benefits of In-House Financing
- Bad Credit, No Credit, No Problem – The economy hasn’t been easy on everyone. Plus, there are people that don’t have credit yet. Banks and credit unions have tightened the reins after the economic dip. Unfortunately, this means not everyone is able to qualify for a car loan, even if getting that loan means you can use it to get more work or it allows you to build up your credit. Car dealerships that use in-house financing have more ability to get you into a car. They can do it by assessing your income instead of your credit. They’ll make sure you have are able to make payments and that you have a steady address.
- Longer Terms – One of the perks dealerships have when it comes to in-house financing is the ability to offer longer terms—in other words, a longer time to pay back the loan. This can make payments lower, and may get you into a nicer car. The best part about a nicer car is that you’re looking at something that’s newer, more reliable and has lower mileage. These things are incredibly helpful in the long run, since you don’t want to get saddled with repair fees in addition to car payments.
- Rebates and Special Promotions – Dealerships like to offer rebates and special promotions. You may see things like military or student specials. These programs usually work only if you get in-house financing. It’s not a bad trade-off, and you avoid the third party involved in the car buying process.
- Realistic Car Shopping – One thing you get when working with a dealership to both buy and finance is a more realistic experience. Rather than dreaming about all those shiny cars before getting the prices, you will sit down and figure out your budget first, and then have the dealer show you the vehicles you are able to afford. It’s a handy way to shop, and it keeps you from choosing something out of your range and then getting turned down.
The Fine Print
As wonderful as the in-house financing sounds, there are still things you need to expect. Yes, you can most likely get into a nicer car with longer terms. That doesn’t come for free. If you are higher risk, you may see higher interest rates. Instead of looking at that as a bad thing, view it as an opportunity. You can begin to rebuild your credit by making payments on time. You’ll also be able to get a car, which is important in today’s world. Keep in mind that if you are late on payments regularly, your credit will be affected negatively.
In-house dealership financing is there to assist car buyers get into a vehicle. It is also there to potentially get them into a nicer, more dependable car. It’s an opportunity to improve your credit as well. So what is the best way to see if in-house financing will work for you? Go talk to a dealer that offers it.