You don’t need perfect credit to get approved for auto financing. There are many subprime lenders out there willing to work with you even if you're struggling with credit. These lenders may require you to have a cosigner in order to get a loan, but having a cosigner isn't an option for everyone. If you don’t have a cosigner and have bad credit, a buy here pay here (BHPH) dealership that offers in-house financing may be just the ticket to getting approved.
How to Get a Car Loan without a Cosigner and Bad Credit
When you have bad credit and you need a cosigner to qualify for a subprime auto loan, you can often get financed without one through a BHPH dealer. BHPH dealerships are in-house lenders, which means you buy the vehicle and get financing all in one place – sometimes even on the same day.
In order to qualify buyers for car loans, BHPH dealers look at factors outside of their credit – the biggest being income. As long as you meet the income requirements and have a down payment, you should be able to get approved for an auto loan.
What you need to be aware of is that these dealerships don’t typically run credit checks, so they also don’t generally report any on-time payments to the credit bureaus, although they usually report any missed payments. At BHPH lots, as the name implies, you're required to make your payments in person, often every week or two, depending on your pay schedule. If your credit is already suffering, failing to make these payments can drop it even more, so make sure you’re prepared to make each payment on time.
Also, keep in mind that the types of vehicles that you find at these dealers aren’t going to be the latest models. Most of the cars available are going to be older models with higher mileage. This doesn’t mean these vehicles are in bad shape, it just means they’ve been around for some time now. As with any car, it’s important you do a VIN check, get the vehicle’s history report, and have a trusted mechanic look it over before buying it.
Work on Improving Your Credit
While your auto loan from the BHPH dealership won't necessarily help you improve your credit, there are a few simple steps you can take to build your credit during one of these loans. Building your credit now can help you finance from a subprime or traditional lender the next time you need a car loan.
Follow these five tips to help improve your credit:
- Keep up with all monthly bills
- Consider adding a line of credit like a secured or regular credit card
- Become an authorized user on someone else’s credit card
- Keep balances low on credit cards
- Pay down any current debt
The Bottom Line
Even if your credit's not perfect, you have auto financing options available. You don’t need great credit, and you don’t necessarily need a cosigner to get approved. BHPH car lots can be an easier and more flexible way to get financing while you're working on improving your credit. If you’re struggling to find financing because your credit is holding you back, or you don’t know where the closest BHPH lot is, let The Car Connection help. We work with dealerships all across the country that are ready to help credit-challenged car buyers. We want to connect you to a local dealer that can help you get back behind the wheel. Start today by filling out our simple auto loan request form.