Sometimes, getting another car is important to your livelihood, and you can't just wait for your credit to improve beforehand. If you have bad credit and need to find an auto loan now, a buy here pay here (BHPH) dealership may be the help you're looking for. Here, the dealers are the lenders, so there's often no waiting around for third-party lenders to decide if your credit is worthy of a car loan.
No Credit Check, for a Price
When your credit is struggling, it can be difficult to get a loan through a traditional lender such as a bank or a credit union. If you've been turned down for an auto loan due to credit issues, a BHPH dealer might be the second chance you need.
These dealerships are known for providing in-house financing, meaning they're the lender backing your car loan contract. Because the dealer is also your lender, there's often no need for them to check your credit.
No credit check can seem like an answered prayer if you've had trouble getting the vehicle you need based on credit. But, in-house financing typically comes with some higher prices than other lending options.
BHPH Trade-Offs
Since BHPH dealerships don't rely on credit to gauge your ability to take on an auto loan, they look instead to your income, and whether or not your down payment is large enough. You typically need to provide proof that you have enough income to make your loan payment, (sometimes on a weekly or biweekly basis). You also need to come prepared with a down payment. BHPH dealers have been known to ask for around 20% of a car's selling price or more.
You're also more likely to pay a higher interest rate than you would at other dealerships. With poor credit, you're facing higher interest rates at likely every place you go, but BHPH rates can be among the highest.
Another thing to note is that BHPH lots only sell used vehicles. This doesn't mean you can't find the right car for you, but know that you should always have a used vehicle inspected by a certified mechanic before signing on the dotted line.
Another Option in Second Chance Financing
If paying a higher interest rate doesn't sound like a trade-off you're willing to take just for the convenience of a no credit check car deal, then you should consider financing with a subprime lender. Subprime lenders know that your credit score doesn't tell the whole story, and they look at additional factors to determine your auto loan eligibility.
Along with your credit score, they look at your income, employment and residence stability, your willingness to make a down payment (typically not as large as required by a BHPH), and a few other stipulations. Each lender has their own amounts and requirements, but most all require a valid driver's license and a list of personal references, as well.
Car loans through a subprime lender may take a few more steps than getting an auto loan from a BHPH dealer, but they can be well worth it. In some cases, you can qualify for newer used vehicles, certified pre-owned cars, or even an affordable new vehicle with subprime lenders, depending on your situation.
Plus, since subprime lenders do check your credit, they also report your timely auto loan payments to the three major credit bureaus, which can help to raise your credit score over the course of your loan. This isn’t always the case at a BHPH dealership.
Ready to Get Started?
If you're ready to find your next car, but don't know where to start looking for an auto loan, look no farther. Here at Drivers Lane, we work with a nationwide network of special finance dealers that are signed up with subprime lenders.
We want to match you to a dealership in your area that has the lending resources to help people with bad credit, no credit, or even bankruptcy get the car loan they're looking for. To get started, fill out our easy, no-obligation auto loan request form now.
