Best In-House Financing Car Loans of 2021

Best In House Financing Car Loans
GUIDE
Aaron Crowe
By: Aaron Crowe
Posted: May 26, 2021
Advertiser Disclosure

Finding the best in-house financing car loans, even if you have bad credit, is easy through a national network of lenders. By filling out one application, you can get multiple offers from auto dealers in minutes.

The car financing is done in-house at the car dealership instead of passing the loan on to an auto lender. An in-house car loan allows consumers to finance a car purchase from the dealer’s lot, which is also called a buy-here-pay-here dealership.

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The Best In-House Financing Car Loans

The lending networks we recommend specialize in helping car shoppers with bad credit find an auto loan. In-house financing allows a car dealership to provide a car and a car loan together.

Loan approval is usually easier in-house than through a bank. So, even if you have poor credit, you should still be able to get car financing from a dealership.

A good way to find these dealerships is through a lending network. We recommend the following three:

  • Network of dealer partners has closed $1 billion in bad credit auto loans
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  • Easy, 30-second pre-qualification form
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Auto Credit Express has a simple, three-step, online application that takes 30 seconds to complete. It asks for your credit score, monthly income, and monthly recurring debt. A secure auto loan request form can also be filled out quickly. An email notification with house financing dealerships in your area can be sent to you within minutes.

Auto Credit Express connects first-time car buyers and people with credit problems, including credit issues such as delinquencies, repossessions, and bankruptcy discharges, to get financed for new or late model cars.

Car.Loan.Com also helps borrowers with bad credit. Many of its lenders give loans to people with low credit scores as long as they have qualifying income, a valid driver’s license, and a stable residence.

Applicants can find out whether they’re prequalified for a loan by completing the online loan application, which takes about three minutes. They can then visit the dealer directly to choose a car and learn more about the loan approval process.

MyAutoloan.com provides up to four loan offers within minutes of applying for a car loan. An online certificate or check is available within 24 hours for you to buy the car you want, pending approved credit.

The site has charts and calculators that make it easy for borrowers to get a good idea of the interest rate they’ll pay and how much their monthly payment will be so they can match it with how much they can afford.

What is an In-House Financing Car Loan?

An in-house financing loan is a car loan directly from the dealership you’re buying a car from. You work with the dealership instead of getting a personal loan or car loan through traditional bank financing.

A bank loan can be used at a traditional dealership, but house financing dealerships sell and finance cars and loans together. Approval may be easier than it is from a bank, especially if you have a poor credit history.

The car loan comes directly from the dealership, or the dealer may work with multiple lenders. You make the loan and interest payments to the dealership for the car you’re buying at the same location.

If you have bad credit, in-house financing can help you rebuild your credit, such as by making all your payments on time. Getting a loan through a dealer can also be faster than going through a traditional lender. Your loan can be approved within hours, and you could drive off the lot in your new car on the same day.

Can I Get an Auto Loan With Bad Credit?

One purpose of in-house financing is to help people with bad credit buy cars. Through the lending networks we recommend, borrowers can be connected with a dealership that is eager to finance and sell them a car.

Someone with bad credit will pay a higher interest rate than would someone with good credit or excellent credit, but they should still be able to qualify for the loan.

Cartoon Image of a Man Trying to Buy a Car

Yes, folks with bad credit can still be approved for auto loans.

An auto loan can be easier to qualify for than a personal loan because it’s a secured loan. The car is the loan’s collateral, meaning that if you default on the loan, the lender can repossess the vehicle. With your car as security for the loan, a lender may be more likely to accept a credit application from someone with a bad credit history.

What Credit Score Do I Need For In-House Financing?

An online lender or auto dealer may not be too forthcoming about the minimum credit score needed to get in-house financing. But based on what a subprime lender normally requires, we have a pretty good idea of what they’re looking for.

FICO credit scores range from 300 to 850. A score of 579 or lower is considered bad credit. A subprime lender may allow borrowers to have a credit score in the 500s, and possibly even as low as the high 400s.

Applying through one of the lending networks we recommend allows you to apply to many lenders at once without hurting your credit score. You should get a quick response from a local car dealer that wants to work with you and get you into a vehicle quickly.

If your credit score is 400 or lower, you may have difficulty getting approved for a bad credit loan, including receiving financing from a dealership.

You may be able to overcome that by making a large down payment, trading in your old car, or getting a cosigner who has better credit than you on the loan. Having a cosigner, who is responsible for the loan if you don’t make payments, may be enough so you don’t need a big down payment or a trade-in.

What Interest Rate Should I Expect to Pay?

Interest rates charged by two of the three lending networks we recommend vary by lender and aren’t listed by credit score. At MyAutoloan.com, applicants can use the auto loan interest rate calculator to roughly calculate what annual percentage rate, or APR, they’ll be charged, based on the amount borrowed, whether they’re buying a new or used car, their credit score, and their zip code.

Someone borrowing $20,000 for a new car who has poor credit and lives in the Bay Area, for example, could pay from 10.25% to 27.9% interest on a car loan. That’s a wide range, and your specific credit score will be a major factor, though other credit report information is also used to determine your interest rate.

Average Auto Loan Interest Rates

These are the average auto loan interest rates based on data from Experian.

Auto Credit Express says the interest rates its lenders charge vary from 4% to 30%. Someone with excellent credit is much more likely to get the lowest interest rate than someone with a low credit score.

Why is a Loan Through a Dealership Better Than Elsewhere?

Auto financing through a dealership is almost a form of guaranteed auto financing. It’s a bad credit financing option that often provides loans to most customers who want it.

This type of guaranteed car financing can make it easier for financing car lots to sell cars, which is obviously the main way they make money. But they also make money through house auto financing, so it’s worthwhile to shop for a lower interest rate and the best payment term you can find before choosing an auto loan.

The financial institution that you’ve done your personal banking with for years, for example, may be able to give you a loan option for bad credit financing because it already has a relationship with you. A credit union may also be able to offer you a bad credit car loan.

In-house car loans from dealerships may be able to offer you auto financing at a longer loan term than a traditional lender. Stretching out a car loan by a few years can make the monthly payment more affordable, though the obvious downside is that you’ll be paying more interest over a longer loan.

Should I Get Car Financing Through My Bank Instead?

Your bank is always a good financing option. If you’ve been a customer for years and have had loans with it in the past that you repaid on time, then it may approve you for a car loan.

The biggest factor to compare is the interest rate you’ll be charged. Banks may charge a higher interest rate if you have bad credit because they may consider you to be more of a risk than a car dealer that offers in-house loans.

But it’s often worthwhile to shop around for a car loan, including at your bank or credit union. If nothing else, you can try to use your bank’s loan offer as leverage when negotiating with a car dealer that’s offering you a loan.

A poor credit score, however, may negate that, and the dealership may be able to offer better loan terms.

Can I Buy a New Car With Bad Credit From a Car Dealer?

Yes. Car dealers usually make more money by selling new cars, and in-house financing loans are available for new and used cars.

A credit score in the upper tier of bad credit, such as 550 or higher, may give you a better chance of qualifying for a new car loan. Otherwise, you may need a cosigner or a large down payment.

How to Get Better Auto Loan Terms

Whatever level of bad credit you have, some type of down payment will probably be required. Few lenders, if any, will lend all of a new vehicle’s price to someone with poor credit.

Lenders may prefer that car shoppers buy new cars, in part, because they hold their value better than most used cars. If you do buy a used car, low mileage on the vehicle you wish to buy may be required by the lender.

Your Best Options For In-House Financing Car Loans

The best in-house financing car loans can help borrowers with bad credit buy a car that most people need for daily living. Owning a vehicle means people with bad credit can reliably get to work so they can pay their debts — including their car note.

Ideally, the loan you choose will report to at least one credit bureau, so your on-time payments will help improve your credit over time.

Lending networks work with many auto dealers around the country to help car buyers with bad credit get loans, starting with online applications that take only a few minutes to complete. The lending networks don’t charge application fees, and potential borrowers can get responses within minutes from a number of auto dealers that lend money.

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