When you've been turned down for an auto loan, even a second-chance auto loan, there may still be options available to you for buying the car you need. Buy here pay here (BHPH) dealers offer in-house financing, and can often provide the loan you need – but be careful, these loans can come with strings attached.
When you go to an in-house financing dealership, you typically aren't asked to provide the dealer with as much paperwork as you are with a subprime lender. Subprime lenders, often called second-chance lenders, can often help people in bad credit situations get the car loan they need by relying on factors such as credit score, proof of income, and residency.
If you're unable to qualify for a loan through a subprime lender, a BHPH dealership may still be able to help, because they don't rely on your credit history. When it comes to in-house financing, lenders (who are also the dealers) typically are only concerned that you have the income to support a car payment, and that you have a down payment.
Most times, these BHPH dealerships don't even check your credit. However, you may also run the risk that they don't report your loan or on-time payments to the credit bureaus, either. But this isn't always the case. More and more in-house lenders are reporting to credit bureaus these days, even if they don’t base your approval on your credit score.
Risks and Rewards of Using In-House Financing
If you plan on going this route, there are some issues that you should be aware of:
First, you may need to make all of your payments at the dealership, often on a weekly or bi-weekly schedule. Your payment has to be on time, every time. Payments made even one day late can sometimes result in repossession. In fact, some BHPH dealers even install engine cut-off switches, and if you fail to make a payment, they can shut the car off remotely so it can't be driven.
Secondly, the vehicles you find at an in-house dealership lots are usually older models with high mileage. The mileage on the cars isn't the only thing that's higher at BHPH dealers. You're also going to face higher than average interest rates when you finance a vehicle through one of these dealerships.
But, the rewards can outweigh the risks with in-house financing. If you're in a bind and need a car fast, in-house financing can often get you financed and in a vehicle in the same day. The reason for this is that since the dealer is also the lender, there's no waiting for a loan decision, as this comes from the person you're already dealing with.
Though having to drive down to the dealership and pay in person could be a hassle, it can also be a plus if you're living paycheck to paycheck.
Finding a Dealership
When you need help getting an auto loan due to bad credit, The Car Connection wants to help. Whether you're looking for second-chance financing through a subprime lender or are in need of in-house financing, we have the connections you need. Our network of special finance dealerships spans the country. Let us help you find a dealer in your area by filling out our easy, free, and no-obligation car loan request form today!