How Does In House Car Financing Work?

Purchasing a new set of wheels is a huge commitment! Most likely, you’ll spend a large chunk of time behind the wheel each day, whether on your commute to work, around town running errands or to and from your various social engagements. You’ll want to pick a car that’s the perfect fit for you. Something that suits your personality, but also offers a lot of function for your lifestyle and day-to-day activities.

That said, purchasing a new ride is also a huge financial commitment. Most consumers don’t have the cash flow to pay for a car without seeking a loan or some sort of financing. For those with poor credit (or no credit), the thought of pursuing a loan is enough to create a downward spiral. It’s just a tough thing to get financing when you don’t have a good track record.

Luckily, an in house financing car dealer may be able to help. These buy here pay here dealerships make life a bit easier. A used car dealership with in house financing is a safe bet if you’re not sure that your credit will pass the test with a major third party financier. While many people are skeptical of an in house financing car dealer, expanding on how in house car financing works and what to look for in a good dealer may help ease some of this stress. Let’s take a peek!

A Snapshot of In House Financing

car dealer

Working with an in house financing car dealer isn’t as complicated as it sounds. In house financing just means that the dealership offers the customer special financing rates through the dealership. Unlike some of the larger financial conglomerates, a used car dealership with in house financing may not check your credit. They don’t have to work through the hoops of low-risk financial institutions; they’re willing to incur the risk on their own.

So what’s in it for the dealership? Most obviously, an in house financing car dealer benefits from this process by making the sale. After all, a large customer base is missed if they can’t obtain financing for the purchase. Merely making the sale on the car is a huge step for most dealerships. Secondly, the dealer profits from the interest on the loan. Similar to third-party lenders, this is a huge perk for the dealer.

The Plus Side

There are some definite “pros” when it comes to securing a loan through an in house financing car dealer. One of the most notable advantages is that you’ll be able to enjoy your new ride much quicker! When you eliminate the third-party lender, communication is simplified, and you can move through the process at a faster pace. A used car dealership with in house financing goes through a plethora of financing applications each day. It’s second nature to them to zip through the paperwork, so you’ll be well on your way in no time.

The second major advantage of financing through the dealership is that you’ll actually be able to purchase your new car! If you’re haunted by bad credit, this process can seem nearly impossible otherwise. However, with in house financing, it’s a lot easier to qualify, and you may be able to purchase a car after all. Once you’ve obtained the financing through the dealership, you’ll also have the opportunity to build your credit. Also, you may be able to refinance at a later date for better terms. This is great for generally responsible spenders who have hit hard times and need a break. It’s an opportunity to start fresh and repair some of the damage.

On the Flip Side

On the flip side, in house financing can create a few more hurdles. Getting over the hump can be challenging. One of the deterrents for in house financing is the perceived higher interest rates associated with this option. An in house financing car dealer knows that you don’t have many options when it comes to financing, but that doesn’t necessarily mean they’ll take advantage of you. Any entity that loans you money will expect to recoup a small percentage for that service. Banks do it and so do traditional car dealerships. Make sure you do some research ahead of time. You may be able to negotiate these rates, especially if you’re well-versed on the marketplace.

Another misperception is that dealerships pressure consumers to purchase vehicles beyond what they can afford. It’s true that there are some out there that may bundle a variety of items together, making the final package look like a great deal when it’s really designed to exploit your ignorance. The fast-talk can be confusing, but it can also be pretty convincing. As a consumer, It’s good to be prepared for this possibility. Equip yourself with a working knowledge of basic loan terminology. You should always work on obtaining the loan with the shortest timeframe and the lowest interest rate. The shorter the loan terms, the less money the dealership makes on interest. Your money is better served paying down the principle than floating toward unnecessary interest. While not all used car dealerships with in house financing will pull this stunt, it’s a good idea to be prepared for any situation.

Still Feeling Skeptical?

Purchasing a new car (especially when your credit isn’t great) can be an overwhelming and frustrating process. You may feel hopeless when trying to prepare for the big financial drop, but you’re not without options. An in house financing car dealer that’s on your side and has your best interests in mind (one like the AutoMax dealerships in Raleigh, Durham, Youngsville, and Henderson, NC) is the perfect match when it comes to financing your new ride!

Our friendly team is here to walk you through all the steps for financing your vehicle. Whether you’re highly seasoned on the process or buying your very first used car, we are honored to help navigate all your unanswered questions. Visit one of our North Carolina dealerships, and speak to an associate today!

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