A staggering 2.3 million loans — that’s the number of car loans that lenders originated in April 2019 alone.
It’s no wonder then that, at the start of 2020, outstanding auto loans totaled a record $1.2 trillion.
All these signal a rise in buying confidence, although it doesn’t paint the whole picture. For instance, a report found that 8.1% of car loan applications got rejected in October 2019. That’s almost twice higher than the rejection rate in October 2018.
If you’re worried about a loan rejection, Buy Here Pay Here dealerships may be your next best option. Compared to banks, BHPH car lots have less stringent lending requirements.
The question now is, what are the benefits of opting for a BHPH financing program? How exactly do loans from these car lots differ from auto loans extended by banks?
We’ll answer all these questions below, so be sure to read on!
1. On-Site Financing
Buy Here Pay Here car lots eliminate the need for a third party lender when it comes to financing car purchases. Instead of applying for an auto loan from, say a bank, you take out the loan from BHPH dealership instead. You’ll have the contract with the dealer itself, and the dealer finances your purchase.
This helps save you from the hassles and lengthy application of traditional loans. If you need to get that new loan on a ride ASAP, a BHPH deal may be your better option.
2. Almost All Types of Credit Accepted
Having a low (or no) credit score is one of the top reasons that auto loans get disapproved. While average credit scores in the US have risen to 703, 12% of the population still has a score lower than 550.
In the Sunshine State, the average FICO score is even lower (694). This shows that more consumers in Florida have less than stellar credit scores.
If you’re part of this group, a traditional lender is unlikely to extend you credit. Even if you have a higher score, so long as it’s still below the “good” category, you still likely won’t get approved.
The good news is, Buy Here Pay Here lots offer financing deals to most buyers, even to those with bad credit scores. In fact, they even specialize in extending credit to those who have yet to build a credit score history.
3. BHPH Financing Can Help You Rebuild Your Credit
In Florida, only licensed car lots can offer financing (such as BHPH deals) to retail buyers. This license then makes BHPH dealerships a type of licensed lender. As a lender, they then have to send a borrower’s loan repayment activities to the credit bureaus.
This means that BHPH financing programs can also help you rebuild your credit. Just make sure that you keep paying all your dues (and not only your auto loan) on time. Keep this up, and you’re bound to see a noticeable difference in your credit score within six months.
4. You Can Get Pre-Approved Online
Even with the stay-at-home orders still in effect in Broward, you can still get pre-approved for a car loan. You can take the first step at home, which is to complete the online financing application. In doing so, the Buy Here Pay Here car lot can start processing your application right away.
5. Fewer Requirements
Aside from your credit score, auto loan lenders will also want to know your debt to income ratio. They’d also look into your income, marital status, as well as your home and work address. If you’re a renter, they’re likely to ask how much your monthly rent is.
Traditional lenders, however, are more stringent, so expect them to require more. If you fall a bit short of their qualifications, they may ask you to put a bigger down payment for the car. Worse, they may not approve your loan application — even if you have a good credit score.
Buy Here Pay Here lots will still need you to prove that your income is enough to cover a potential new loan. You also have to confirm that you have a stable job and you may need to have been with the same employer for some time. They may request other documents, but at the end of the day, BHPH requirements are a bit laxer than banks.
6. A Down Payment Isn’t Always Required
It’s completely up to you if you want to put a down payment or not on your car purchase. Of course, doing so will help you reduce the total cost of your auto loan. Still, if you rather not make a down payment, you may still qualify for financing.
7. Lower Risks of “Biting More Than You Can Chew”
Once you’ve completed the requirements, the BHPH car lot will be able to figure out how much they can loan you. From here, they’ll give you a list of vehicles that fall within the loan amount.
At first, this may seem like a drawback, since you’ll have a limited selection. However, it can also be a good thing, since you’ll only be able to choose a vehicle that meets your budget. You’ll be less likely tempted to buy a car that’s more than what your current finances can afford.
8. Financing is Available for Pre-Owned Vehicles
BHPH lots specialize in selling (and financing) pre-owned vehicles. You’d want to go with pre-owned cars since they cost less and they also have a slower and lower depreciation rate. Plus, they’re a good choice for those looking for a greener, more eco-friendly ride.
9. Flexible Repayment Terms
BHPH financing programs allow you to negotiate when and how much you’d pay every month. Let’s say that bi-monthly or even weekly payments will be easier on your pocket. Then you only have to let the dealer know so that they can calculate how much you’d need to pay.
Buy Here Pay Here Dealerships May Be the Key to Your New Wheels
As you can see, Buy Here Pay Here dealerships like Monster Cars can be a good alternative to banks or third party lenders. If you think that your current credit score won’t cut it, consider working with a BHPH car lot. This way, you’ll have a much better chance of changing gears in a new (or pre-owned) vehicle soon.
Ready to get a financing deal for that vehicle you’ve had your eye on for months? Then please feel free to connect with us now! We’ll be happy to answer your questions and help you get that ride home.