Life is unpredictable, and sometimes you just need another vehicle now. If you've got bad credit or no credit, and aren't concerned with finding the "perfect car," in-house financing through a buy here pay here (BHPH) dealer can be a good choice if you need a car quickly.
Shopping for a Used Car?
When you opt for a vehicle at a BHPH dealership, you need to understand that these dealers only provide used cars.
The standard assumption in days gone by was that only old, high-mileage vehicles were found at BHPH lots. Though that used to be true to some extent, it's not the case anymore. You're often able to find many late model options that could be perfect for you these days!
Because BHPH lots deal exclusively with used vehicles, they can be a good place to look when you need something to get you by for the time being. Even though they can be a quick solution, they may not be as inexpensive as you hope.
The Cost of Shopping at a BHPH Lot
BHPH dealers aren't as concerned with your credit score as other dealerships. In fact, they typically don't even look at your credit. These dealers offer in-house financing, which means they're the lender, too. Because they back all the cars themselves, you don't have to wait for an approval from a third-party lender, which typically makes the process faster.
However, you're expected to bring in a large down payment, sometimes around 20% of a vehicle's selling price, and you can also expect a high interest rate. These are the trade-offs for an auto loan that's not based on credit.
On the flip side, since many buy here pay here dealerships don't check your credit, they aren't as likely to report your timely payments to the credit bureaus. When lenders report your timely payments, it helps improve your credit score. When BHPH dealers don't do this, your credit score doesn't improve through loan payment like it would with car loans through other types of lenders.
Perks of Choosing a BHPH Dealer
Dealing with a BHPH dealer, or a tote the note dealer, as they're sometimes called, means being prepared to prove that you can afford an auto loan with your income, and bringing in a down payment before being able to drive off the lot in a vehicle you're buying. However, cash and a valid driver's license is about all that's required at many BHPH lots.
This means they can be a great option for someone who needs a car quickly, but has already been turned down by a traditional lender. Since there's no waiting for the dealership to contact a third-party lender, loan approval is also relatively quick, and, in many cases, you can drive away in a vehicle the same day.
BHPH dealers aren't for everyone, though. If you have damaged credit and you're looking for a better solution to getting the car you need fast, a subprime lender may offer auto loans that can help repair your bad credit. Plus, with a subprime lender, you may even be able to finance a gently used certified pre-owned vehicle, or even an affordable new car in some situations.
Why Choose Subprime?
Subprime lenders are third-party lenders that work through special finance dealerships. These lenders know that you're more than a credit score. Even though they do look at your credit, subprime lenders rely on additional factors, such as your income, your employment and residence stability, and your willingness to make a down payment to get a better understanding of your overall situation. Due to this, they can consider auto loan approval for a wider range of credit scores than traditional lenders.
Like BHPH dealers, subprime lenders require you to provide proof of your ability to take on a car loan, including making a down payment. However, the down payment requirement for a subprime lender is typically only a minimum of $1,000 or 10% of the vehicle's selling price, sometimes whichever is less.
Let Us Help You Get Started
Whether you're searching for a new or used vehicle, it can be difficult to know where to start if you have less than perfect credit out of fear of being turned down for an auto loan. Special finance dealerships don't always stand out from the crowd, so driving around town could only result in wasted time and effort.
Instead, start right here at Auto Credit Express. We've gathered a nationwide network of special finance dealers that are signed up with subprime lenders. Our process is fast, free, and without obligation, so there's no need to hesitate.
Simply fill out our easy car loan request form, and we'll get to work matching you to a local dealership that wants to help get you into your next vehicle.