Buy Here Pay Here Financing
Credit Standards for Buy Here Pay Here Financing
As you're looking for various auto loans outside of traditional avenues, you have options. A Buy Here Pay Here dealer may be the best choice for you. If you have less than perfect credit and have gotten turned down by a traditional lender, a Buy Here Pay Here financing company can help.
Before you visit a Buy Here Pay Here lender, it’s important to do a little research so you're aware of the facts.
Credit Score Basics
Your credit score is a three-digit number that reflects how well you manage your credit. Almost every individual has one and this FICO score usually falls between 300 and 850.
Most lenders in the United States review and approve/deny consumers for loans based on their FICO score. Your score is based on your overall credit history, how much debt you have and your ability to pay it off in a timely manner. This information is used to determine how much money you're able to borrow and at what interest rate.
Credit Score Tiers
Before applying for a Buy Here Pay Here auto loan it's important to know what your credit score. This will allow you to get the best interest rate and financing terms for your financial situation. There are three main credit bureaus who gather your financial history, track your credit and calculate your credit score: Equifax, TransUnion and Experian.
While each one calculates a person's score differently, they generally use the same criteria. Here is an approximate range of credit scores so you can see how yours stacks up.
- Excellent credit: 740 - 850
- Good credit: 680 - 740
- Acceptable credit: 620 - 680
- Subprime credit: 550 - 620
- Poor credit: 300 - 550
- No credit: 300 or less
As someone with a subprime credit score you may have less options than someone with better credit, but a Buy Here Pay Here dealership is a great choice.
Buy Here Pay Here Requirements
As a subprime buyer, here is what you need to know to prepare for a Buy Here Pay Here auto loan.
- The minimum credit score varies - You must know what your credit score is and how it compares to the minimum required. Depending on the lender, the minimum credit score needed to apply for a Buy Here Pay Here auto loan will vary. This is another reason it's important to shop around before applying.
- A down payment is usually required - When applying for a Buy Here Pay Here loan you will likely be required to pay a 20% down payment in order to help reduce the size of your loan and give you more favorable financing terms. Some dealerships may accept less than 20% but a down payment of some amount is usually required.
- You can still afford a vehicle - Despite your past financial history you can still afford to buy a vehicle. Many dealers will ask for proof of income and other documentation to help gauge your reliability.
- Shop around and compare rates - Different dealerships will offer different interest rates on your auto loan so take your time to research and compare. It could save you a good chunk of money over the lifetime of your car loan.
There are financing options and auto loans for everyone, no matter what your credit score is. Just make sure you're aware of all the pros and cons, and that you understand how your credit score will affect your auto loan options.
What Is Buy Here Pay Here Financing?
Are you running out of options to finance your car? Maybe your credit is less than perfect or you’re short on cash? These are issues that could definitely prevent you from financing with a traditional lender. Fortunately, buy here pay here financing may be a viable option for you.
A Closer Look at Buy Here Pay Here Financing
Buy here pay here loans are granted to borrowers with subpar credit. Loan applications for buy here financing are processed and approved the same day.
Buy Here Pay Here Financing Terms
The buy here pay here dealership will probably offer you a loan with a much higher interest rate than what you’d find with a traditional lender. Buy here pay here dealerships do this to protect themselves in case you default on the loan.
Applying for Buy Here Pay Here Financing
Before applying for a buy here pay here loan, access your credit report to confirm the information listed is accurate. You may also want to check your score to know where you stand when you apply. Rectifying any issues could provide your credit score the boost it needs to explore other options beyond buy here pay here financing. Also, take a moment to calculate how much you can afford for a deposit and monthly payment.
Having poor credit won’t necessarily keep you from getting behind the wheel of a new ride. However, you want to be mindful of the ins and outs of buy here pay here financing prior to signing on the dotted line
Do I have to have a cosigner to get a buy here pay here auto loan?
In the past, borrowers with poor or minimal credit history needed a cosigner to qualify for buy here pay here financing. Those days are long gone, but having a cosigner on board could save you money on your buy here pay here auto loan.
Buy Here Pay Here Financing Without a Cosigner
When applying for buy here pay here financing without a cosigner, you should be prepared to make a down payment. You will also need to present a verifiable source of income to prove you can make timely monthly payments on your buy here pay here auto loan each month.
But no need to worry about your credit score since many buy here pay here financing companies don’t require a credit check. This means that even if your credit is poor, a cosigner won’t be necessary to obtain approval for a buy here pay here auto loan. However, bear in mind that buy here pay here auto loans come with higher interest rates because they pose a greater risk to the lender.
Benefits of Having a Cosigner
If you have a cosigner with stellar credit, you will be offered more favorable financing terms or get approved through a traditional lender. You could also be offered lower interest rates and monthly payments.
But if you default on the loan, whether it is from a buy here pay here financing company or traditional lender, the delinquency will be reported on both you and your co-signer's credit reports since you both entered into the financing agreement to purchase the car. By contrast, making timely payments each month will positively affect both of your credit scores.
Having poor or no credit doesn’t mean you can’t purchase a vehicle on your own using buy here pay here financing. However, it may be in your best interest to bring a cosigner on board to help you qualify for more affordable auto loan options.
How to Get a Car Today with Buy Here Pay Here Financing
If you want to purchase a car within the same day, you might want to consider going with a Buy Here Pay Here financing company. What this means is that you secure the loan and make the payments at the dealership where you purchased the vehicle.
With Buy Here Pay Here financing, almost all people are approved because the dealer wants to sell you a car, which is helpful if you have bad credit. Another advantage to going with a Buy Here Pay Here financing company is that the down payments might be lower, or they may be willing to take older cars as a trade in towards a down payment for your new vehicle. If your Buy Here Pay Here dealer reports your payment history to the credit bureau, it will help repair or build your credit history.
If you decide to purchase a car using Buy Here Pay Here financing, you will first be pre-qualified to determine how much money the car dealer is willing to lend you. There is the possibility of providing supporting documentation, such as proof of employment after you are pre-approved, so be sure to have those on hand. Then the dealer will show you cars that you are able to purchase based on the loan they are willing to give you. You should test drive and inspect the vehicle before you make your final decision and sign on the dotted line.
Buy Here Pay Here financing terms might be different than a traditional loan. The Buy Here Pay Here financing company might not accept online payments or checks my mail. As with all purchases, make sure you understand the late payment policy. Find out what the grace period is, or if there is one.
If you think that Buy Here Pay Here financing is right for you, there are many dealers than can help you find the vehicle you need.
Will a Buy Here Pay Here Car Dealer Need My Credit Report?
If you've decided to go with a Buy Here Pay Here loan, you need to be aware of the exact process that happens when working out Buy Here Pay Here financing terms. You will need to be pre-qualified for a Buy Here Pay Here auto loan first before looking at the types of vehicles you can buy.
Not all Buy Here Pay Here financing companies will need to pull your credit report, but it may be to your benefit if they do. The main reason they would pull your credit is to help them understand your financial history, and to see how much they should give you for a Buy Here Pay Here loan. It's all based on what you can afford to pay every month. Since Buy Here Pay Here car lots typically approve everyone, even those with bad credit, you don't need to worry about whether or not they look at your credit score.
Some Buy Here Pay Here dealers won't pull credit, which sounds great it you have a bad credit score, but beware. There are some Buy Here Pay Here financing companies that are scams. Many will tell you that if you have no credit, you'll still get approved, or don't mention it at all. If a dealer starts asking you your credit score or how much money you make without actually pulling your credit or ask you to be pre-qualified first, that should be a indication that the car lot might scam you.
As with all large purchases, make sure you do your research, and don't feel like you have to buy your vehicle at the first Buy Here Pay Here dealer you visit.