The first thought that comes to mind is how any credit used car financing can exist. The response is that there is a significant need and demand for automobiles, and removing all buyers with subpar credit would significantly reduce vehicle consumption and impede economic expansion. Therefore, there is a little-known segment of the auto retail industry that fills this void by selling and financing automobiles to buyers with credit scores that the majority of lenders would reject.
Buy Here Pay Here (BHPH) dealers or car lots are typically those that provide financing for used cars to customers with any credit history. The term “buy here, pay here” is not a secret; in fact, it is quite straightforward. You buy from the dealer and make payments there as well. In a nutshell, the dealership or car lot not only sells used cars but also serves as a lender or bank. In order to lower their risk, these businesses only offer used or pre-owned vehicles for sale.
Car Financing Options for People with Bad Credit or No Credit You may have noticed advertisements that claim that certain dealers offer financing to people with bad credit or no credit at all. This is actually in-house financing that is available at buy here pay here car dealerships. These are the dealers that offer financing for used cars with or without credit. They are not bound by the regulations or underwriting that the majority of auto lenders use to decide whether a borrower is a good risk. In the showroom, they make the decision about whether or not to approve a car loan. They look at your income, the length of time you’ve worked there, and where you live to determine whether or not they will finance the vehicle of your choice. “If you have a job, you are approved” is one of their favorites.
For a variety of reasons, including the economy and a higher rate of bankruptcy filings, this somewhat unconventional method of providing financing for used cars has been steadily expanding. The most important thing is that bad credit people can still get a car. These individuals would have difficulty maintaining their vehicles, securing employment, supporting their families, and managing their day-to-day responsibilities if they were unable to obtain a dependable vehicle. Therefore, vehicle financing with bad credit is absolutely necessary.
People with credit scores ranging from excellent to extremely poor may not be eligible for a conventional auto loan from an automaker’s lending unit, but they may be eligible with sub-prime lenders. These lenders have made it their business to provide auto loans to people with bad credit who need to buy a car. They use the buyer’s credit score, income, and employment history to determine eligibility. However, the auto loans they approve come with additional restrictions. The loan amount, the term of the installment contract, the age and mileage of the vehicle, and the amount of the buyer’s down payment may be restricted by these conditions before final approval is granted.
Although these subprime lenders do not offer bad credit used car financing, their loans typically have lower interest rates than buy here pay here car dealerships. As you can see, there is a way to finance a used car with bad credit; the only difference is where or who the deal is done.
