In-House and Traditional Financing Each Offer Their Own Advantages


All too often individuals are told that a low credit score will stop them from making big purchases, such as a car or home. Unfortunately, this type of misinformation can cause many adults to simply stop planning for these great milestones in life. While it is true that a low credit score can close some doors for regular financing through banks and other financial institutions,  in-house financing may provide the solution you need to help support your next vehicle purchase. 

The “buy here pay here” model used by in-house financing providers helps eliminate the need for a banking institution or large credit lender and helps car buyers build a solid path to vehicle ownership. 

What Is In-House Financing?

In-house financing means that the business you’re buying from extends financing themselves, instead of working with outside lenders. If you purchased a car from a big Toyota dealership, for example, they might run a credit check and work with a financial institution like Bank of America. If you’re approved, the bank would give you a loan to buy a car from the Toyota dealership. A car dealership that offers in-house financing can help you finance a car themselves (in-house) without relying on an outside bank or financial institution. This means that car dealerships with in-house financing have a lot more flexibility to help buyers with credit problems that might keep a financial institution from approving them for a car loan at a traditional car dealership.

The Basics of In-House Lending

As you could probably imagine, in-house financing occurs when the business selling a product, such as a car, allows the buyer to finance the purchase directly through them. Instead of applying for a loan through a bank, a customer can receive the funding they need directly from the business they are making their purchase with.

For example, if you are buying a car through a dealership, you may be able to apply for in-house borrowing and negotiate a unique repayment arrangement through the dealership. 

Although in-house borrowing may not always be available to buyers, it is a powerful borrowing tool which offers an outstanding array of benefits. 

In-House Lending vs. Regular Financing

One of the largest differences between in-house lending and regular financing is credit requirements. In-house lending has become extremely popular in automobile sales, mainly because it typically allows buyers from all different walks of life to fund car purchases. 

If, for example, you have been turned down for a traditional financing agreement, you may discover that you qualify for in-house financing. Not only is in-house financing more flexible for car buyers than traditional lending, but it is also much quicker to obtain. Buyers are often surprised how quickly they can be approved for in-house money lending. This is typically because the in-house lender can compare your financial profile to their own lending standards rather than waiting for the approval of a bank. 

Moving Ahead With Financing

In the event that you are ready to purchase your next automobile, you may decide that in-house financing through your auto dealer is the right move. Always discuss your goals and needs with your automobile dealer to determine whether or not their financing services are compatible with your own situation. If you determine that in-house financing is not an option, take a moment and ask your auto dealer what recommendations they may have to move forward with your purchase. The chances are good that they will be willing to help you find the perfect arrangement! Car buying doesn’t have to be an impossible task, and in-house lending is helping connect adults with the cars they need across the country.


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In-House and Traditional Financing Each Offer Their Own Advantages