In-house financing dealerships, also known as buy here pay here (BHPH) dealers, offer auto financing to borrowers who aren’t able to get approved with a subprime lender. If you live in the Seattle area, you’ve probably seen these dealerships around Aurora Avenue or Lake City Way. But what makes BHPH dealers different from traditional lenders?
In-House vs. Subprime Lenders
The biggest difference between a BHPH dealership and a subprime lender in Seattle is how they look at your credit. Although subprime lenders specialize in helping credit-challenged consumers, they still look at your credit score and reports in order to determine if you qualify, on top of your income, residence stability, down payment, and more. The biggest benefit with a subprime auto loan is that you can finance a car while improving your credit.
BHPH dealers, on the other hand, lend in-house and don’t look at your credit score or reports. Instead, they base approval on your income, down payment, and (sometimes) your residence stability. Because they don’t rely on credit history for approval, they generally don’t report any loans or on-time payments to the credit bureaus, either.
The specific requirements for approval vary by lender or dealership, but you generally need to make at least $1,500 to $2,000 a month before taxes to qualify. If you’re asked to show proof of residency, make sure you have a recent utility bill in your name at the address listed on the application.
As for the down payment requirement, well, that’s a whole other story.
Meeting the In-House Down Payment Requirement
Subprime lenders typically don’t ask for a large down payment, usually requiring $1,000 or 10 percent of the vehicle’s selling price, whichever is less. On the other hand, BHPH dealers generally ask for a larger down payment. These dealerships often need to cover the cost of the car, and may ask for a down payment well over 20 percent of the vehicle’s selling price.
The good news is you don’t have to resort to just paying cash to cover a down payment, you have two other options:
- Trade equity – If you have a trade-in that is paid off or has equity, you can use that toward the down payment.
- Combination – If your trade-in doesn’t meet the down payment requirement, or you simply want to lower your monthly payment, you can combine cash and trade equity.
Get the Car You Need in the Emerald City
Whether you decide to get a vehicle through an in-house financing dealer or a subprime lender, it’s important you do your research ahead of time and budget accordingly. If you don’t want to be stuck driving from dealership to dealership around Seattle only to be turned down for financing, we have the solution.
At Auto Credit Express, we help car buyers in Seattle and the rest of Washington state get the financing they need by connecting them with dealers in their area that specialize in helping those with imperfect credit. Our process is simple, and comes with no obligation to buy anything. Get matched to a local dealership today by filling out our auto loan request form today!