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The first thing that comes to mind is how can there be such a thing as any credit used car financing. The answer is that there is a huge demand and need for automobiles and if you cut out all the buyers that have less than perfect credit you would greatly reduce the consumption of vehicles and hamper the growth of the economy. So in order to fill that need there is a little known part of the auto retailing business that sells and finances vehicles for buyers that have credit that most lenders would turn away.
The dealers that offer any credit used car financing are usually called Buy Here Pay Here (BHPH) dealers or car lots. The buy here pay here terminology is no secret, in fact it is quite simple. You buy at the dealer and you make your payments at the same dealer. In short the dealership or car lot is not only the retailer of a used vehicle, buy they also act as the bank or lender. These establishments only offer used or pre-owned vehicles for sale rather new ones as a way of reducing their risk.
Car Financing Options for Any Credit Status
You may have noticed advertising that says bad credit or every credit qualifies for financing at certain dealers which is actually in house financing offered at buy here pay here car dealerships. These are the dealers that have any credit used car finance options. They are not bound by the underwriting or regulations that most auto lenders use to determine if a borrower is a good risk or not. They decide right there in the showroom in they are going to approve for an auto loan. The methods they use to decide if they will finance your choice of vehicle is based on income, time on your job, and length of time at your address. One of their favorites sayings are “If you have a job you are approved”.
This rather unconventional method of providing financing for used cars has been growing steadily for a number of reasons, from the economy to a higher rate of bankruptcies being filed. The main thing is that people that have terrible credit can still get a vehicle. If these people were unable to get a dependable vehicle they would have a problems keeping and finding a job, providing for their family and taking care of the everyday business of life. So there really is a need for any credit vehicle financing.
Somewhere between having great credit and extremely bad credit there are people that have credit that may not qualify for the conventional auto loan from an auto maker’s lending unit, but they can qualify with what is called sub-prime lenders. These lenders specialize in providing auto loans for the person with marginal credit that needs to buy a car. They use the buyer’s credit score to determine eligibility along with income and length of employment. However they also have certain stipulations for the auto loans they approve. These stipulations can limit the dollar amount of the loan, the term on the installment contract, the age and mileage of the vehicle and the amount of down payment that the buyer must have before the final approval is made.
These sub-prime lenders don’t have used car financing for bad credit, but they charge less interest on their loans than the buy here pay here car dealership does or at least in most cases. As you can see there really is a solution for any credit used car financing the only difference is where or with whom the transaction is made.