In House Financing vs Bad Credit Car Loans

There are a number of advantages to getting an in-house car loan from a local car lot. With this type of loan, you get financing directly from the dealer and there is no credit check. Although these Canadian dealers have helped many people finance a car, it may not be the best choice for a bad credit car loan in Canada.

If you don’t know much about the car business, you may not know what in-house financing is. In the States, it’s called buy-here, pay-here or "tote the note", but it doesn’t matter what you call in-house financing, it means that you can not only buy a car from the car dealer, but you can also finance it, right at the dealership, with money you actually borrow from the dealer instead of a bank or finance company.
There are plenty of this type of car dealer in Canada, a few examples would be Ontario Car Dealers and British Columbia Car Dealers.

Bad Credit Car Loan Reasons

Many Canadians in the market for a car – especially if they have bad credit – start by going to one of this type of dealer, thinking that they have no choice other than an in-house car loan. These customers think that because they don’t have a high Beacon score, a regular car dealer in Canada will be able to get them approved for an auto loan. In many cases, this may be true. Here’s why:

For many customers that have a short time on the job, a low income, say $500 per month, or no credit history, the chances of getting financed at a regular dealer are pretty slim. For these customers, in-house financing may be the only way that they can finance a car. But many people who believe that the "dealer financed" arrangement is their only option may be surprised at the number of other opportunities for financing that they really have.

The big advantage of an in-house finance arrangement is the fact that these dealers don’t require credit checks. But this also means that, in most cases, repaying this type of auto loan doesn’t help your credit score, since most of these dealers don’t report your good payment history to the credit bureaus.

So if you are looking for a bad credit car loan in Canada and you have at least 3 years on the job, you might want to consider an online car loan site that specializes in car loans for people with bad credit. These loans require a credit check, but once you are approved, each month that you make a car payment you are taking one more step in rebuilding your credit score and reestablishing your financial future.

Tags: bad credit car loans, canada, in house financing