We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.
Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.
Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.
If you’re having trouble getting a car loan and your credit is the reason, an in-house financing dealership may be able to help.
In-house financing dealerships, commonly called “buy-here, pay-here” dealerships, offer financing directly to car buyers. Since these dealerships finance car purchases themselves, they don’t have to get approval from a bank or other lender to grant your car loan. Buy-here, pay-here dealerships set their own loan approval requirements.
This might sound much easier than the typical car loan process. The downside? You’ll most likely end up paying much more in interest buying a car this way.
Benefits of in-house financing dealerships
People with rough credit, or little to no credit history, may not be able to get approved for a traditional auto loan. They also might not have the money they need for a down payment.
But in-house financing dealerships provide loans independently and at their own discretion, free of the credit and down payment requirements that traditional auto loans may impose. This makes it possible for some people to get an auto loan when they wouldn’t have a chance otherwise.Can you get a car loan with bad credit?
The car you might be able to get from a buy-here, pay-here dealership probably won’t be brand new (and may not be your dream car), but there’s a good chance it’ll at least get you on the road.
Downsides of buy-here, pay-here dealerships
While looser lending requirements might get you the set of wheels you need, financing from a buy-here, pay-here dealership has some big drawbacks.
First, you’ll likely pay a higher interest rate than you would with a traditional car loan. The loan may even be a precomputed interest loan, which can be a big financial pitfall.
What is a precomputed interest car loan — and why avoid them?
When reviewing an offer from an in-house financing dealership, watch out for the precomputed interest loan.
Unlike simple interest loans, which are more typical in auto financing, precomputed interest loans calculate the amount of interest you’ll pay over the full term of the loan — and require you to pay all of that interest, even if you pay off the loan faster.
Buy-here, pay-here car dealerships may charge more for the cars they’re selling, too. Since you can only use in-house financing for cars on that dealership’s lot, you’re stuck buying from that particular dealer’s inventory. This means you can’t shop around for a great deal.
Additionally, buy-here, pay-here dealerships can lend as much they want, and may set their prices accordingly. This means you can end up in far more debt than your car is worth, putting you “upside down” on your car loan from the get-go.
One other potential negative to consider: While in-house financing dealerships may not check your credit, some will offset the risk of lending by other means. One way is to install a device in your car so they can disable the vehicle or more easily repossess it if you miss a payment.
How to find in-house financing dealerships
It’s usually not hard to find an in-house financing dealership. You’ve probably driven past plenty of them. Look for signs that say things like “buy here, pay here,” “no credit needed,” “no credit — no problem” or “no credit check necessary.” A quick search online for buy-here, pay-here car dealerships or in-house financing car dealerships, plus your city’s name, will also do the trick.
Before you bother heading to a dealership in person, call and ask if they offer in-house financing that might meet your needs. And talk to friends or family who might have ideas about specific car lots to avoid.
While an in-house financing dealership may seem like your only option to buy a car if you have no credit or iffy credit, you should definitely check your other options first.
Remember, buying a car from a buy-here, pay-here dealership will likely cost you much more than financing a car through a traditional lender, so it’s always best to start your search with banks or credit unions and other car dealerships.
If you run into trouble getting traditional financing, consider finding a co-signer or holding off and improving your credit before purchasing a car, if you can wait. Considering all the negatives, buying a car at an in-house financing dealership should be a last resort.