Whether or not you should go to a buy here pay here (BHPH) dealership for your next car loan depends on your situation, your credit, and how quickly you need a vehicle. A BHPH dealer can be a good choice if you need a car quickly but aren't too keen on having someone check your credit.
The Benefits of BHPH Car Loans
If you have little to no credit and you need a vehicle fast, a BHPH dealership may be for you. These in-house financing dealerships play dual roles as both the dealer and lender, and have a reputation for providing no credit check auto loans.
BHPH car lots don't have to worry about outside lender approval, so they don't generally check your credit score. This means that you may be able to get an auto loan even if you have no credit or really bad credit. The benefit to this is that you can typically get in and out with a vehicle the same day, if you come prepared.
Preparing for an Auto Loan From a BHPH Dealer
In order to get a car loan from a BHPH dealership, you need a qualifying income and must provide a down payment. This often means proving you make enough income to cover your payment each month, and bringing in a down payment of around 20% of the vehicle's selling price.
Some of these dealers require you to make your payments in-house, sometimes more than once a month, depending on your pay schedule. If your car lot does this, make sure that you can make it there when each payment is due.
Some BHPH dealerships check your credit, but many don't. Even if they're not checking your credit, it's a good idea to know where yours stands in case the car lot you shop with does check. By knowing your credit score and what's on your credit reports, you give yourself the power to rate shop and negotiate with some dealers on your loan rate.
You may not be able to negotiate with a BHPH dealership, though, and you're likely to have high interest rates when you work with them. This is often the trade-off for applying with a dealer that doesn't check your credit, or put much stock in it if they do.
Also keep in mind that BHPH dealerships only sell used vehicles, so be prepared to take a thorough test drive and have a certified mechanic check out the car before you sign any paperwork.
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Special Finance Dealerships Offer an Alternate Choice
Unlike BHPH dealers who provide in-house financing, special finance dealerships work with third-party lenders – captive and independent lenders alike. One advantage to special finance dealers is that they’re often signed up with subprime lenders.
Subprime lenders can help people who are struggling with credit challenges to get the auto loans they need despite a low credit score. These lenders do check your credit, but also use additional factors to ensure that you can comfortably and successfully take on a car loan.
There are typically a few qualifications you need to meet to work with a subprime lender, such as providing proof of your income, employment, and residency. You typically also need to provide a down payment of at least $1,000 or 10% of the vehicle's selling price, sometimes whichever is less.
Subprime lenders make a good alternative to BHPH dealerships, and since they check your credit, they also report your on time payments to the major credit bureaus, which builds your payment history to raise your credit score.
Finding a Subprime Lender
Special finance dealers don't always stand apart from the crowd, so it can be difficult to tell which are signed up with subprime lenders. If you start right here at The Car Connection, however, we can navigate your path to an auto loan.
We work with a nationwide network for special finance dealerships, and we want to connect you to one in your area. Get started right now by filling out our fast, free, and zero-obligation car loan request form.