If you’re worried about getting approved for a car loan due to bad credit, you should know that you have options. You can get a bad credit auto loan with no credit check at a buy here pay here (BHPH) dealership, but you should be aware of the pros and cons ahead of time.
Buy Here Pay Here Dealers: Pros and Cons
Most buy here pay here dealers don’t run credit checks, so it makes it easier to get approved for a car loan. In the off chance that they check your credit, they let you know ahead of time. This is the biggest advantage to choosing a BHPH dealership – especially if you have bad credit or no credit.
To qualify you for an auto loan, these dealers use your income and require a down payment. As long as you make enough income and have the required amount of money down, you shouldn’t have an issue getting approved.
Another edge is that buy here pay here dealerships finance their vehicles in-house, so they are both the lender and the dealer. This one-stop shopping can make the car buying and financing process a lot easier and quicker compared to a subprime lender.
Unfortunately, financing through a BHPH dealership comes with some disadvantages that you need to keep in mind. Since they typically don’t run credit checks, it may mean they won't report your loan or timely payments to the credit bureaus. This would mean you couldn't improve your credit score with one of these loans.
A second issue is the aforementioned down payment requirement. At BHPH dealers, how much you’re required to put down usually depends on the vehicle you choose. It's not uncommon for them to carry a larger down payment requirement than other lenders as a result.
Finally, one last con is the selection of cars available to you. BHPH dealerships only sell used vehicles, so don't expect to find any brand new models on the lot. Additionally, your selection is limited to what you qualify for based on your income, and what they have on the lot at that point in time.
Keep an open mind when visiting a buy here pay here dealer, and have any car you’re considering checked out by a certified mechanic before you buy it.
Is a Subprime Auto Loan Better?
Financing through a buy here pay here dealership is a practical way to get a bad credit auto loan with no credit check. However, a BHPH dealer may not be the route to take if you want to improve your credit score with your car loan.
If this is the case for you, you're better off applying with subprime lender. These lenders specialize in financing borrowers in unique credit situations, and are available through special finance dealerships.
Unlike BHPH dealers, subprime lenders use your credit when qualifying you, but also report your loan and on-time payments to the credit bureaus. They consider additional factors in addition to your credit for approval, such as income, employment, and residence stability.
With bad credit, you're likely to get an auto loan with a higher than average interest rate, regardless of the type of dealership you work with. But, working with a subprime lender could allow you to get a lower rate and a better vehicle than you'd be able to at a BHPH dealer, plus the chance to build credit at the same time.
Need Assistance Finding a Dealership Near You?
A buy here pay here dealership is the place to go to get a bad credit car loan with no credit check, but you should consider a subprime lender if you want to improve your credit.
Regardless of the type of lender you want to work with, finding one that fits your needs and credit situation isn’t easy – and that’s why we’re here to help.
At Auto Credit Express, we match people to local special finance dealers to help them get financed if they're dealing with less than perfect credit. The process is simple. Just fill out our free auto loan request form, and we’ll work to get you connected to a dealership near you!