In House Financing Car Dealers

In house financing car dealers provide auto loans on-site, as opposed to relying on third-party, off-site lenders to finance their customers. More and more dealerships have been bringing their financing departments “in house,” because it offers them some key advantages. The prime benefit of in house financing is that it increases the pool of prospective applicants. Basically, a dealer can lend to people whom banks and lenders would reject – most importantly, people with poor credit ratings. This allows them to sell more cars and trucks, while enjoying the extra profit stream of being not just a dealer, but a lender as well.

Advantages of Dealerships with In House Financing

For the consumer, the advantages of working with an in house financing car dealer are clear:

  • Better chances of financing approval.
  • Streamlined approval process.
  • Single point of contact for payments, maintenance, etc.

If you have been declined for financing by a bank or other lender, a dealership with in house financing may be your best and only option. The dealer will be incentivized to approve you for financing; after all, they want to sell you a vehicle first and foremost! However, there are few things to keep in mind.

Points to Consider When Getting Financed In House

The interest rates associated with in house auto financing are very, very high – much higher than you would expect from a bank, credit union, or auto finance company. The reason for this is simple: the dealership must protect itself against losses associated with borrower default – a very real risk when financing people with very bad credit. In any case, these elevated APR rates mean that you should finance a vehicle that is well within your budget. Modest, even.

This brings up a second point to consider: risk of repossession. With dealing with in house financing car dealerships, you must be sure to watch out for your own financial well-being. Even a reputable, well-meaning dealer could be tempted to talk you into a financing arrangement that doesn’t fit your budget, but gets you behind the wheel. Sure, you might be able to afford the payments at first, but can you afford them for the next 48, 60, or 72 months? You must ask yourself this question. In fact, it would be smart to enlist the help of a professional financial adviser – someone who can help you create a proper budget.

Choose your state from the list to learn about in house financing car dealers in your area.