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What Do I Need to Qualify For In-House Car Financing?

Applying Is Faster and Easier Than Traditional Loans

In-house financing car lot options have become increasingly popular, offering a streamlined approach to car buying that can benefit shoppers looking for more flexible loan repayment terms.

In-house used car financing is a process where the dealership itself provides the loan for your vehicle purchase, rather than working with external banks or lenders. This can offer several advantages, particularly for those who might struggle to secure traditional auto loans

But what exactly do you need to qualify for this type of car financing? Let's explore why in-house financing might be the right choice for your next vehicle purchase.

The Basics Of Qualifying For In-House Car Financing

While car finance rates and specific requirements can vary between dealerships, there are some common factors that most in-house lenders consider when evaluating your application.

Used Car

Income and Employment

One of the primary factors in qualifying for in-house financing is your income. Dealerships want to ensure you have a steady source of funds to make your payments. 

Typically, you'll need to provide proof of income through recent pay stubs. If you have multiple jobs, be sure to bring pay stubs from all of them.

Residency and Stability

Dealerships offering in-house financing often place a high value on stability. They'll typically want to see proof of where you live. 

Your lease agreement or a utility bill in your name with your physical address on it can satisfy this requirement.

Down Payment

In-house used car financing requires a down payment. This serves two purposes: it reduces the amount you need to borrow and demonstrates your commitment to the purchase.

The required down payment can vary widely, depending on the value of the vehicle you’re purchasing. In general, the higher the purchase price, the larger your down payment will need to be.

Credit History

Here's where in-house financing really shines for many buyers. While traditional lenders often have strict credit score requirements, in-house financing is more flexible. They may not consider your credit score at all, even if they do check it.

This flexibility can be a game-changer for those with less-than-perfect credit histories who are looking for used car financing options.

Documents You'll Need

When applying for in-house financing, be prepared to provide:

  1. A valid government-issued photo ID.
  2. Your most recent pay stubs.
  3. A utility bill or lease agreement showing your name and physical address.

If in doubt, call ahead to ask what you should bring when you apply for used car financing.

The Benefits of In-House Car Financing

Opting for in-house financing can offer several advantages:

  • A faster approval process: Decisions can be made within minutes, so you’ll hear right away if you’re approved for a loan.
  • More flexible terms: Buy here pay here dealerships may be willing to work with you on payment schedules.
  • An opportunity to rebuild credit: Regular, on-time payments can help improve your credit score if the used car dealer reports payments to the major credit bureaus.
  • A simplified process: Everything is handled in one place, including selecting your vehicle and finalizing the loan.

Comparing In-House Financing Car Lots to Traditional Used Car Dealer Financing

Now that you know what in-house car financing requires, let’s compare that to traditional car loan requirements.

  • Traditional car loans require credit checks and have a minimum credit score requirement - usually about 650. In-house financing generally does put as much value - if any - on your “creditworthiness.” For people with challenging credit histories, this can make buying a vehicle much easier at a car lot that offers in-house financing.
  • Traditional loans require you to have a specific debt-to-credit ratio, meaning your existing debts can only be a certain percentage of your income. There is less of a concern about this ratio for in-house financing. However, smaller incomes may only qualify you for less expensive used vehicles.
  • Traditional car loans require more extensive personal information, including your social security number, W2s, and more. In-house financing requires only basic documents: a photo ID, recent pay stubs, and proof of your address. This is adequate information for  in-house lenders to determine whether you qualify.

Get On the Road With the Car Financing That’s Right For You

Qualifying for in-house car financing doesn't have to be a daunting process. Dealerships offering this option are often more interested in getting you behind the wheel than scrutinizing every detail of your financial history.

Whether you're rebuilding your credit, facing challenges with traditional lenders, or simply prefer the convenience of one-stop shopping for your vehicle and financing needs, in-house options can pave the way to your next car purchase.