In House Financing Dealers Explained

How do these Dealers Work?

This type of financing means that you are getting your car purchased & financed from the same locale: The Dealer! This is also commonly known as buy here pay here financing. In House Financing Dealers can be one of the best options for a consumer looking to get a good deal on the financing, as well as things like quick or guaranteed approvals.

Buy Here Pay Here Options that are selling their own cars are a lot more likely to be willing to approve clients with poor credit. In house financing dealers are also generally more accommodating in the process since the entire approval, buying, safety, signing experience is done under one roof so all the departments are much more coordinated. In general, in house financing dealers are a great way to get a good deal on a car and financing, as long as that dealership or their finance partner do a good job!

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Our Solution

If you’re looking for a comprehensive solution, we’ve got your back. We have strong relationships with lots of dealer partners and a dedicated/experienced finance staff, which eliminate all the cons we just mentioned, while keeping all the pros. While traditional in house financing dealers can be a good option, we offer the best of both worlds and can give you the same experience. Just send through an application and you’ll hear from us very soon! Convenience & approvals for even those with bad credit are there for all applicants of all credit – in fact, we’ll help build your credit.

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Pros of Buy Here Pay Here Dealers

  • Forgiving Finance Options
  • Closed loop efficiency
  • More available low down payment options
  • Convenient

Cons of In House Financing dealers

  • Not as specialized as finance institutions
  • Less vehicle options
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Options through a third-party for in house financing dealers

Many dealers, in contrast to the traditional model have deep relationships with a specialized finance firm. These dealers know that the buy here pay here model can be an important alternative to the bank financing model, and so have partnered with a specialized firm to offer the best options for clients. This can be just as efficient if not better than general in house financing, since these firms are just as likely to take care of you as the dealer, but also have decades of experience in the business. That means that you get the best of both worlds and get a more wholistic view of your credit report.

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Traditional Financing

The main option to which Buy Here pay Here or In House Financing Dealers offer an alternative for is third-party banks, primarily through banks. These can include:

  • RBC
  • CIBC
  • TD
  • Desjardins
  • Scotiabank or SDA

Unfortunately, these options aren’t very forgiving to those with bruised or bad credit, which is where Buy Here Pay Heredealers or the other options we mentioned before come in!

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Bad Credit Car Repair – Understood

When you’re thinking of getting financing to repair your car there are a few things that you should do beforehand. First, you need to check if you have a warranty included on your car. Sometimes, certain parts are covered since their new car sale, even if it may not have come with a direct warranty when you bought your used car. Additionally, sometimes dealers include warranties as promotional products and so double checking is always helpful. Assuming you don’t qualify for a warranty claim, bad credit car repair loans are an effective tool at your disposal by which you can get some help.

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Bad credit Car Repair Through your Dealer

Car repair loans, or mechanical liens can operate in a few different ways. The first way is through your dealer or mechanical repair shop. Bad credit car repair can be a lot easier if your dealer already has a company that they’ve dealt with in the past, since that relationship can streamline the process, and means that the dealer trusts the company to treat their customers right. This process is incredibly simple, similar to getting used car financing, you would fill out an application, along with the information of your vehicle and the estimated repair costs. The company will then, if you are approved have you come sign the contract associated with the loan, and you will get your repair paid for. Afterwards, it is your responsibility to pay for the car repair loan, and any other outstanding balances on the car, or either of the financing companies could repossess your vehicle.

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Bad Credit Car Repair Online

If you’re reading this now, then you might be looking for a loan. Well, you’re in luck, we offer loans to clients regardless of their credit situation. We take into account the big picture, as well as the value of your car, and get you approvals that might be tough to get for other lenders. Keep in mind, that the process is very similar to going through your dealer. You fill out an online credit application, we approve you and you’re on your way to driving a working car again. You do of course want to make sure that you have the ability to make payments on the car however since this would qualify as installment type of credit, and will report to your credit bureau. This means that if you miss payments, not only might your car get taken, but you might have a tougher time getting financing in the future. If you do have the capacity to pay, and you are in need of a car, not to worry, even if you are in any of the following situations:

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Of course,  a bankruptcy is a tough time, and it can make getting financing difficult. However, as long as you have a good reason, Priority Car Financing will consider you for a bad credit car repair loan. Additionally, these types of loans can be a great way of building credit, since you would be showing future creditors that you have the ability to deal with big ticket items and can be trusted with a payment. This is because installment credit can be especially useful after bankruptcy since it is more proactive, and is more weighty than a credit card.

New Credit, New to Canada?

Not to worry, same as with Bankruptcies or bad credit, we consider all types of clients, especially if it’s new credit clients that are trying to build their reputation and build credit for the future. We understand how tough it can be to get a repair loan without any payment history, which is why we have special programs to accommodate your needs and get you back on the road, along with a hopefully better credit score, should you pay of course!

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Advantages of Repair Loans to alternatives like Personal Loans

If you’re in a situation where your car has broken down, it can be easy to think that unsecured personal loans could work for your situation, but there are a few reasons why you should consider mechanical liens more productive in many cases. First, they might offer lower rates since they are securitized on an asset (that being your car) – that means that you’ll pay less in interest and it will also lower your payment, making it easier to afford both your repair loan and the car loan that sometimes accompanies it from before. This brings me to the next idea, increased terms. Clients that get bad credit car repair loans can get access to specific programs that tailor to your financial needs. As such, you can get longer terms that make affording the loan much less straining on your pocketbook, and thus less likely for you to ruin your credit score.

Final Decision

If you are in need of this type of financing, then it’s great knowing you have a lot of options. However, before proceeding with anything, make sure that you are happy with the repair estimate that your mechanic is giving you. It can be easy to get caught up in low payments and forget the upfront cost. Make sure that you can afford any loan you get involved in, since a mistake can make it much harder to get financing in the future and could lose you your car!

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Payment History to Build Credit

If we were to rate the one thing that would mostly affect your ability to build credit, it would be your Payment History. At the end of the day, Creditors are interested in seeing how you would make your payments, and your history with others is an indicator of if they will make money or not.

How to build credit on your history:

  • Always make your payments on time
  • The minimum payment should always be made before or on the due date. 
  • If you expect issues in making payments please contact the creditor, since they might be accommodating – especially if you have a good reason
  • Don’t skip a payment even if a bill is in dispute. Creditors will report the information the way they have it. It would be better to pay and then retrieve the money after/if the dispute is won. If you assume you have a point and you should not make payment might result in a negative reporting.

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Credit Utilization is bad for building credit

Another factor that really affects your ability to build credit would be your Credit Utilization Rate. It is the ratio between your balance and the amount of credit granted to you. Higher this ratio, lower the score. If you do use all the money provided, it will look as if you are utilizing a lot and you are in need of credit. This would make the lender nervous and make decisions that would reflect a higher risk undertaking.

Don’t go over your credit limit. If you have a credit card with a $5,000 limit, try not to go over that limit. Borrowing more than the authorized limit on a credit card can lower your credit worthiness and make it much harder to build credit.

Try to use less than 50% of your available credit. It’s better to have a higher credit limit and use less of it each month.

For example:

  • a credit card with a $5,000 limit and an average borrowing amount of $1,000 equals a credit usage rate of 20%
  • a credit card with a $1,000 limit and an average borrowing amount of $500 equals a credit usage rate of 50%

If you use a lot of your available credit, lenders see you as a greater risk. This is true even if you pay your balance in full by the due date.

To figure out the best way to use your available credit, calculate your credit usage rate. You can do this by adding up the credit limits for all your credit products.

This includes:

  • credit cards
  • lines of credit
  • loans
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Understanding Utilization

For example, if you have a credit card with a $5,000 limit and a line of credit with a $10,000 limit, your available credit is $15,000.

Once you know how much credit you have available, calculate how much you are using. Try to use less than 35% of your available credit.

For example, if your available credit is $15,000, try not to borrow more than $5,250 at a time, which is 35% of $15,000.

Keep in mind though that if you do manage to optimize your credit usage on the card, and pay it off every month automatically, it can be an excellent way to build credit.

Use different types of credit 

A mixture of the Installment & Revolving types of credit would probably be your best case scenario.

Your score may be pushed lower if you only have one type of credit product, such as a credit card.

A mix of credit products may improve your credit score. Make sure you can pay back any money you borrow. Otherwise, you could end up hurting your score by taking on too much debt.

Think about it this way. Installment credit requires that the lender pulls money from your account. Revolving credit requires you to make the payment on the due date. A lender wants to see that you can handle all these transactions in a timely manner.

Another element would be the Comparable Trade. This element has a huge impact in the decision of a credit analyst. If you request an amount of $10.000 and you have shown that you have handled this amount in the past then any other lender would feel more comfortable to approve you for similar amounts to the $10.000 – this phenomenon of taking on loans you can handle for larger amounts of money can help you down the road when building credit as you move up the $ amount chain. 

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Think about timing when you build credit

Time in credit matters. In the credit report there is an item called “Date File Opened”. That would reflect the time you first became part of the credit report. It would be the time when a lender pulled your credit for the first time.

The longer you have a credit account open and in use, the better it is for your score. Your credit score may be lower if you have credit accounts that are relatively new.

If you transfer an older account to a new account, the new account is considered new credit.

For example, some credit card offers come with a low introductory interest rate for balance transfers. This means you can transfer your current balance to this new product. The new product is considered new credit.

Consider keeping an older account open even if you don’t need it. Use it from time to time to keep it active. Make sure there is no fee if the account is open but you don’t use it. Check your credit agreement to find out if there is a fee. Of course, it is probably not worth it if there is a fee, but if not, having an older account open on your credit report can help you build credit. 

Limit your number of credit applications or credit checks 

It’s normal and expected that you’ll apply for credit from time to time. When lenders and others ask a credit bureau for your credit report, it’s recorded as an inquiry. Inquiries are also known as credit checks.

If there are too many credit checks in your credit report, lenders may think that you’re:

  • urgently seeking credit
  • trying to live beyond your means

How to control the number of credit checks when you build credit?

To control the number of credit checks in your report:

  • limit the number of times you apply for credit
  • get your quotes from different lenders within a two-week period when shopping around for a car or a mortgage. Your inquiries will be combined and treated as a single inquiry for your credit score.
  • apply for credit only when you really need it
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“Hard hits” versus “soft hits”

“Hard Hits” are sometimes referred to as “Regular Hits”. They represent credit checks that appear in your credit report and count toward your credit score. Anyone who views your credit report will see these inquiries and as mentioned before, they can be detrimental to credit building efforts.

Examples of hard hits include:

  • an application for a credit card
  • some rental applications
  • some employment applications

“Soft hits” are credit checks that appear in your credit report but only you can see them. These credit checks don’t affect your credit score in any way.

Examples of soft hits include:

  • requesting your own credit report
  • businesses asking for your credit report to update their records about an existing account you have with them

You might also hear “Soft Hits” from the finance company you do your banking with. TD Canada Trust for example has an internal score that sometimes they use in order to decide for some quick decisions.

Click Here if You Want to Build Your Credit – Get Your Dream Car Today!