If you’re concerned about getting a car loan approval because of bad credit, you should know that you have options. You can get a bad credit car loan without a credit check from a buy here pay here (BHPH) dealer, but you should be aware of the pros and cons beforehand.
Buy Here Pay Here Dealers: Pros and Cons
Most buy here pay here dealers do not carry out credit checks, making it easier to get approved for a car loan. In case they check your credit, they will let you know in advance. This is the biggest advantage of choosing a BHPH dealer, especially if you have bad or no credit.
To qualify for a car loan, these dealers use your income and ask for a down payment. As long as you have enough income and the required amount, you should have no problem getting approved.
Another advantage is that buy here, dealers pay here 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 faster compared to a subprime lender.
Unfortunately, financing through a BHPH dealer comes with some drawbacks that you should keep in mind. Since they typically don’t do credit checks, this may mean they don’t report your loan or on-time payments to the credit bureaus. This would mean that you would not be able to improve your credit score with any of these loans.
A second problem is the aforementioned down payment obligation. At BHPH dealers, the amount you have to deposit usually depends on the vehicle you choose. It is not uncommon for them to have a higher down payment requirement than other lenders as a result.
Finally, one last drawback is the selection of cars available to you. BHPH dealers only sell used vehicles, so don’t expect brand new models on the lot. In addition, your selection is limited to what you qualify for based on your income and what they have on the lot at the time.
Keep an open mind when visiting a buy here, pay dealer here, and have any car you’re considering checked out by a certified mechanic before buying.
Is a subprime car loan better?
Financing through a buy here, pay here dealer is a practical way to get a bad credit car loan without a credit check. However, a BHPH dealer may not be the way to go if you want to improve your credit score with your car loan.
If this is the case for you, you’re better off apply to subprime lender. These lenders specialize in financing borrowers in unique credit situations and are available through dedicated financial dealers.
Unlike BHPH dealers, subprime lenders use your credit to qualify you, but also report your loan and on-time payments to the credit bureaus. They take into account additional factors in addition to your approval credit, such as income, employment, and residence stability.
With bad credit, you’re likely to get a car loan with a higher-than-average interest rate, regardless of the type of dealer you work with. But by working with a subprime lender, you can get a lower rate and a better vehicle than at a BHPH dealer, plus the chance to build credit at the same time.
Need help finding a dealer near you?
A buy here, pay here dealer is the place to get a bad credit car loan with no credit check, but you should consider a subprime lender if you want to boost your credit.
Regardless of the type of lender you choose to work with, it’s not easy to find one that fits your needs and credit situation – which is why we’re here to help.
Bee Auto Credit Express, we match people with local dedicated financial dealers to help them get financed when dealing with less than perfect credit. The process is simple. Just fill our free car loan application form, and we’ll do everything we can to put you in touch with a dealer near you!