Are you having trouble getting a car loan, and your credit score is the problem? Well, don’t worry!
The solution to your problem lies in in-house financing. Not sure what in-house financing is and how it can help? This blog will help you get a clearer idea of what in-house financing dealerships offer.
But first, let’s take a look at what in-house financing actually is.
What Is In-House Financing?
Like other forms of financing, in-house financing also refers to the provision of a loan to the customer by a company. However, the loan is given directly to the customer by the company, which allows the customer to purchase products or services provided by the business. The best part about in-house financing is that it eliminates the need to secure a loan through a financial institution.
When you opt for in-house financing for car dealerships, you get a car and a loan within the same place. This means that instead of waiting and relying on the bank to approve your application, you can go directly to the source. This also means that you have more flexibility, especially when you don’t have the perfect credit score.
Understanding In-House financing
In-house financing allows you to get a product or avail of service within the company. Many retailers are now providing the facility of in-house financing for their customers to ease the purchasing procedure.
For providing customers with in-house financing, it is important that the retailers have an established lending business. The lending business can either be part of their own firm, or they can collaborate with a single third-party provider to service credit for their customers.
A very prominent user of in-house financing is the automobile sales industry because of the nature of the business. The industry requires customers to avail of auto loans to close the purchase of a vehicle. When a customer is offered in-house financing for purchasing a car, the firm is able to seal more deals by accepting more customers.
One of the biggest benefits that the automobile dealers have is that they can set their own standards for underwriting. This helps in acquiring a greater number of borrowers, which can ultimately allow the acceptance of lower credit scores. Most of the time, platforms that provide in-house financing approve applications from borrowers with bad credit scores that might have been turned down for a loan through banks or other financial industries.
Example Of In-house Financing
Many companies and systems in the credit market have incorporated the new-emerging feature of in-house financing. Due to this expansion, customers are now open to a variety of in-house financing through a faster and more convenient point of sales credit platforms, backed by the selling company.
Point-of-sale credit technology is usually built within the company’s in-house credit department. However, when the company partners up with a single service provider, it is generally facilitated to cater to the customer’s lending needs. The process is simplified for the customers through point-of-sale since it allows the customers to apply for credit at the point where they are ready to buy.
Point-of-sale credit is very convenient since it enables them to receive a decision within minutes from the retailers. It is also pretty convenient for the sales process since it helps the retailers in closing the deals easily.
Pro & Cons Of In-House Financing
In-house financing is often referred to as “buy-here, pay here” dealership. Since the customers are given the provision to directly contact the source for the purchase, there are lots of benefits added to it. But, like every other phenomenon, in-house financing has some downsides to it as well. We have listed down the pros and cons for you below:
Pros Of In-House Financing
- The biggest benefit that comes with in-house financing is flexibility. In-house financing dealerships have lesser requirements and regulations than banks or other financial intermediaries. This is helpful for customers with bad credits or no credit histories since they have a better chance of getting their application of car loans approved.
- In-house financing is quite convenient. When you get a loan and shop for a car within the same place, it helps in saving your time and energy from continuously going back and forth between your dealership and bank for finalizing the purchase.
- You can also build credit with some in-house financing lenders. Car loans are a form of installment credit. This means that you cannot borrow more amount that you have been approved for and you have a specific time limit to pay it back. It allows customers with bad credit scores to rebuild their credits over time.
Cons Of In-House Financing
- In-house financing causes higher interest rates. This means that you could be paying more interest through the length of your loan. But, some dealerships might offer lower interest rates if you are up for closing the deal.
- The contract options are limited. Most dealerships have closed financing. This means that you cannot pay your loan ahead of time and if you want to end your contract early than the agreed time, you will have to pay the penalty.
- Before you sign the contract, it is essential to know if they report payments to credit unions as some dealerships do not report the payments. The payments need to be reported to each of the credit bureaus, to improve your credit score.
How 500 Below Cars Does It
At 500 Below Cars, we provide you with the car loan you need. Our process is easy and offers several in-house financing dealerships.
Our long list of satisfied clientele shows our efficiency and means of providing viable solutions. If you are in need of a sweet deal for your in-house financing, then wait no more. With our easy process, you can pick your monthly finances easily. Call us Now!