Yes, you can buy a car from a buy here pay here (BHPH) dealer with bad credit. In fact, in some cases, this is often a good route if you've already been turned down for an auto loan. BHPH dealers can typically get you into a vehicle, but there are some big differences in the process.
BHPH Dealers and Bad Credit
BHPH dealers are in-house financers and they're both dealer and lender. This is convenient for bad credit borrowers since you don't have to wait for approval from a third-party lender. This means you may be able to get in and out with a vehicle despite having little or no credit.
However, since in-house financers may not check your credit score or reports, you may find you're facing higher interest rates and a larger down payment requirement than you might find with other lenders.
BHPH dealers also check your income level and typically have similar guidelines to subprime lenders. Subprime lenders require a minimum of $1,500 to $2,500 from a single job, supported by computer-generated check stubs. BHPH dealers, on the other hand, usually have a minimum income requirement but aren't always particular about how many jobs you have, or how you prove your income.
Subprime Lender Options
If you're struggling with credit issues another option to consider besides a BHPH lot is a subprime lender. These are third-party lenders signed up with special finance dealerships. They're prepared to work with a wide range of borrowers because they look at more than just your credit score to help you qualify for financing.
One bonus you might find with a subprime lender that you don't typically find with BHPH dealers is credit repair. Subprime lenders check your credit, and they also report all your payments to the major credit bureaus. Payment history is the biggest factor that contributes to your credit score, so the more you pay your bills on time the better.
When working with a subprime lender you may find that you're only required to have a minimum $1,000 down payment or 10% of the vehicle's selling price. BHPH dealers often require around a 20% down payment.
Not Sure Where to Start?
If you're not sure where to start your search for a car loan your first step should be to check your credit score and reports. You can view your credit reports for free from the three national credit bureaus – TransUnion, Experian, and Equifax – by visiting www.annualcreditreport.com. You can get a free copy of each credit report every week until April 2022.
Bad credit is typically considered a credit score of 670 or lower. Though different lenders have different score ranges they use to qualify you for financing, this is usually the line between good and bad credit. If you have bad credit your options aren't limited to just BHPH dealers that only sell used cars. You may be able to finance with subprime lenders or even the captive lenders of some automakers depending on your situation.
Rather than trying to find the right lender on your own, let us be your guide. At Auto Credit Express, we want to take the hassle out of your search for an auto loan. Simply fill out our fast, free car loan request form and we'll get to work matching you to a dealership in your area.
