In House Financing Car Dealers and Dealerships

By: Jenny Alamari

Too often, those with bad credit think that the only way that they’re going to get approved for a car loan is if they use “in house” financing, such as is offered by buy here, pay here car dealerships. This simply isn’t the case and there are options available for those that are interested in getting a real car loan with better terms.

Dealers that offer “in house” financing, are generally smaller used car dealers that have older model, high mileage cars for sale. You can’t possibly expect to be provided with a warranty as most all of these vehicles are sold as is. Would you like an extended warranty on a used car purchase? If so, you need a real car loan and a vehicle that is eligible for such a warranty. In order to qualify for an extended auto warranty on a used car, the vehicle generally needs to be 1 to 3 years old with moderate mileage for the respective year model. But, a lack of warranty is just the beginning when it comes to buy here, pay here types of car dealerships.

Interest Rates

The interest rates charged by dealers that finance their own cars can be astounding. They can even be higher than what many major credit card companies charge. Albeit you do have to pay a higher interest rate when you have bad credit, regardless of where you obtain your financing from. It’s simply unreasonable however, to expect someone that already has bad credit, to pay an interest rate that is counterproductive to their being able to repair their credit with payments that are affordable.

Down Payments

These types of car dealerships most always, and I repeat ALWAYS want a down payment. Why? To reduce their risk of putting collateral out on the highways. They want to have as little invested in that vehicle as possible after your down payment. Most people that have credit issues don’t have three or four thousand dollars to put down for a down payment. Not having a substantial amount such as this, really limits your selection of vehicles with dealers that finance their cars in house.

Purchase Prices

Not only will you pay a higher interest rate and be required to put down a sizable down payment for any of the nicer cars, you’re going to pay a higher sale price than you would if you had purchased either from a normal car dealership, or through a private owner. Expect to pay at least 10% to 50% more than retail for a car purchased through a buy here, pay here car lot. It’s a shame that one’s credit blemishes can resort to this type of predatory lending and sales practices, so one should definitely only use these types of dealers after careful research and only after exploring other options that are available for bad credit car loans. Some of these services are available online, through lending partners that specialize in helping people that have bad credit to obtain auto financing. You may find that even with a bad credit rating, you still qualify for special finance through a normal auto loan lender.

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In summary, anyone with bad credit should only resort to using in house financing car dealers when they have no other choice. Read the guide to buying a car with bad credit at Thank you for reading!