How In-House Financing Dealerships Impact Credit Scores

Page Blog 016 How In House Financing Dealerships Impact Credit Scores Financing
In house financing car loans are a popular choice for individuals who haven’t established credit reports yet or who have made mistakes with credit in the past. These loans allow you to finance your vehicle directly through the dealership instead of through a bank, which can be a good option when you’re having trouble being approved elsewhere. Here at Auto City, we offer buy here pay here financing so you can drive home with a vehicle and improve your credit score while making payments.

Many people are under the impression that in house financing doesn’t improve their credit scores, but this isn’t necessarily true. In fact, there are a few ways that this type of car loan can help you improve your score depending on where you purchase your car. If you shop with us, your purchase will help make an impact if you have bad credit. Either way, here are some basic facts about how in house financing can impact your credit.

Reporting to Credit Bureaus

Many in house financing dealerships actually report timely payments to the credit bureaus. Many of them don’t, but it is something to ask about. Just remember that the loan will show up on your credit report as a line of credit if the dealership reports to the major credit bureaus. If they do, it’s important to make your payments on time.

Changing Your Debt-to-Income Ratio

When you go to get a loan through a bank for a home or for another big purchase, one thing that lenders often look at is your debt-to-income ratio. Having a high percentage of debts in relation to your income can make your credit score fall significantly, and it can make lenders nervous about extending credit. If your dealer doesn’t report your loan to the credit bureaus, however, this debt will not be considered when a lender looks at your credit report. This is something you will want to consider before purchasing, depending on your situation.

Refinancing at a Later Date

If you are working on your credit report right now and can’t get approved for a separate loan or don’t want to add a new debt into the mix, buying a vehicle with this type of financing can keep you driving while simultaneously increasing your score. Once your on-time payments have helped you improve your score, you may be able to refinance later.

Although some people prefer to go through banks and other traditional lending institutions when financing their vehicles, in house financing can be a smart option for many. If you are want to make sure that you can drive a nice, reliable vehicle while improving your credit score, our buy here pay here program may be the right fit for you. Apply today and don’t forget that we have a “$500 Today Drive It Away” program that can get you on the road as fast as possible!

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