Bad credit is becoming more common in Ohio and across the US. Most finance companies decide whether to approve you based on your FICO score. Buy here pay here car lots do not. Generally, they are more worried about whether you can make your payments in the years ahead, not just your track record of doing so. Since the loan comes from the dealership, you’ll be sending your payments directly to the dealer, not to an off-site finance company or bank. But how do you know if a dealer provides this type of financing? Many will say things like like:
- We Finance
- Tote The Note
- Your Job is Your Credit
- Rent to Own
- In-House Financing
Is My Credit Score Too Low?
Unlike a bank or finance company, BHPH dealers rarely have credit minimums. That being said, they do have minimum income requirements. Typically, you will need a minimum income of $1500 a month or $375 a week. That’s gross income, before taxes, as opposed to what you actually bring home on a monthly basis. If you don’t earn enough, but you have a spouse or parent who earns $1500 monthly and is willing to cosign, make sure to indicate this on your application. This will give you a much better chance of being approved.
What’s the reason for this income requirement? Dealers want to know you can afford your payments. If you earn less than $375 per week, it may be difficult to find a vehicle with payments low enough not to strain your budget. It is against a dealer’s best interest to finance you in this case, because the chance of repossession is high. Contrary to popular belief, dealers do not like to repossess vehicles. Typically, it means they will take a loss on the entire investment.
How Much Will You Have to Put Down?
Typically, dealerships that have in-house financing require a down payment. Repossession rates are high for this type of financing, so a down payment protects the dealer against losses incurred should the vehicle be repossessed. The money you spend on a down payment is just that: spent. So, as a buyer, you must decide whether you’d rather have that money set aside in case of a crisis. Many BHPH dealers require quite high down payments, often in excess of 20%, and they may or may not accept your trade-in vehicle. Often, you will get more money out of your existing vehicle by selling it privately, then putting that cash toward your down payment.
Knowing Your Agreement
The buy here pay here industry is rife with repossessions. It’s absolutely crucial to select a vehicle whose payments you can easily afford. It’s also important to read the terms and conditions in your agreement. If you don’t, you could end up being caught unawares For approval, you may have to agree to the installation of a GPS tracking device, and/or an ignition kill-switch. Both of these devices are designed to assist in recovery, should the vehicle need to be repossessed, and their usage has become quite common across the industry. Be sure to discuss such details with your dealer, as well as the grace period for late payments.
How to Get Approved for Financing in Ohio
Who wants to drive all over town, looking for a buy here pay here dealer? That’s where we come in. Here at Buckeye Auto Finance, we get you approved to finance a car in less time, with fewer hassles. We offer our services free of charge, and there are no obligations.