Shopping for a used car with a low credit score or poor credit history? Read this before you stop at your local Buy Here Pay Here car lot! If you’ve been turned down for an auto loan or have a past repossession on your record, it’s easy to feel like your only option is a Buy Here Pay Here lot.
At DriveHubler Certified Pre-Owned, we work with real lenders, banks, and credit unions, to help drivers get approved and back on the road without the long-term drawbacks of Buy Here Pay Here financing. As a part of the reputable Hubler Automotive Group, we can typically offer more flexible terms, better vehicles, and a path to rebuilding your credit and improving your financial future.
Too Long; Didn't Read (TL;DR)
- Buy Here Pay Here Lots may seem like an easy choice if you have a poor credit history, but they often sell lower quality vehicles at high interest rates and shorter terms; these are high profit for the dealership but high risk for the car buyer.
- Financing through a bank or other reputable lender may still be possible if you have bad credit and could save you thousands in the long run. If you qualify, you would likely have a lower monthly payment and more flexible terms.
- Improve your odds of credit approval by having your proof of income and residence ready when you visit the dealership. Having a down payment or trade-in vehicle is very helpful when trying to secure an auto loan with bad or no credit. If a family member can co-sign for you, that can help you secure a loan with a lower APR and payment.
- Getting an auto loan through a trusted financial institution and making on time payments will help you build your credit over time. This can help you achieve other financial goals in the future. A Buy Here Pay Here loan may not have a positive impact on your credit score.
What is a Buy Here Pay Here?
Buy Here Pay Here (BHPH) car lots sell used cars with in-house financing. Meaning, the dealership itself lends you the money to purchase the vehicle instead of using a third party financial institution like a bank or credit union. These dealers market heavily to people with bad or no credit and can offer quick approvals, but that often comes with costly trade-offs like short terms, high interest, and few options.
The Hidden Downsides of Buy Here Pay Here Financing
At first glance, Buy Here Pay Here financing may seem like the easiest option for buying a car, especially if you have never purchased a car before or you know that your credit history isn't the best. While BHPH financing may be appealing, there are some serious drawbacks to consider first:
- Higher interest rates- BHPH interest rates are often significantly higher that traditional auto loans and can be 20% or higher. As an example, if you finance a $20,000 car in Indiana for 4 years at 22% interest (with no down payment), you will end up spending over $10,000 in interest.
- Limited Vehicle Selection- BHPH inventory is often limited to older and higher-mileage vehicles. This makes the higher interest rates even more risky because you may be on the hook for a high monthly payment if the vehicle were to have a major malfunction and be inoperable. This also means you may settle for a car that isn't ideal for your needs. If you shop at DriveHubler Certified Pre-Owned, you have over 1,000 options available with third party lenders.
- Frequent Payments & Shorter Terms- BHPH loans can require payments be made biweekly or even weekly, which can be hard to manage especially if budgets are tight. Since these loans are risky for the dealership, they typically have strict, shorter terms- that means higher payments for you. A bank or credit union may be able to finance a vehicle for 5 or 6 years while buy here lots could require the entire amount be paid in 2 or 3 years.
- No Credit Reporting- Many buy here pay here lots do not report your payments to credit bureaus. This means that even if you make all of your payments on time and pay off your loan, your credit score does not benefit. A traditional auto loan lender reports to major credit bureaus like Transunion and Equifax so your credit score improves with timely payments and you end up in a better credit situation than you started in. Our auto financing experts can help you put together a payment plan that helps you build a positive credit history so you can upgrade with an even better auto loan next time.
A Better Alternative: Financing Through Trusted Auto Lenders
Working with a reputable dealership like DriveHubler Certified Pre-Owned gives car buyers the opportunity to finance with a large variety of established financial institutions. This means that your auto loan is backed by a bank or credit union and not the dealership itself; these loans can be available to those with poor or no credit under the right circumstances. Financing through a trusted auto lender, bank, or credit union typically offers:
- Competitive interest rates and terms- Since we work with a variety of subprime lenders, our finance team can help you pick the one with the best rates. Banks and Credit Unions typically offer much lower APR than Buy Here Pay Here lots, which can save you thousands over the life of your loan and lower your payment significantly. Traditional lenders also may have more flexible monthly payment terms with loans up to 84 months available.
- Better Selection and Quality Vehicles- Reputable pre-owned dealers, like DriveHubler Certified Pre-Owned in Greenwood, Indiana, can offer hundreds of late model and low mile used cars so you don't have to compromise on the reliable car that you want. Your vehicle may include warranty coverage, like Hubler's Q Certified Warranty, for added peace of mind.
- Credit Building Opportunity- Since lenders report your loan and payments to credit bureaus, a traditional auto loan gives you the opportunity to increase your credit score as you pay your car off. Increasing your credit score and having a good payment history can help you qualify for other loans in the future like a mortgage or newer car.
Bad Credit isn't a Deal Breaker- What You'll Need to Get Approved
Many people assume that bad credit automatically means they can't get approved through a bank or credit union. In reality, there are many lenders who specialize in subprime auto financing or have programs available for rebuilding your credit through an auto loan. Even if you've experienced late payments, repossession, or bankruptcy, there is likely an option to secure an auto loan at DriveHubler Certified Pre-Owned.
Each credit situation is unique and there are many factors that play into getting your approval. Depending on your situation, lenders may ask for any of the following:
- Down Payment- This is how much cash up front you are paying towards the cost of the vehicle. While a down payment isn't always necessary, a down payment helps lower the loan amount and improves your approval odds.
- Co-signer- Having a co-signer with better credit instantly improves your approval odds and may help you qualify for a lower interest rate and longer term. If you have a family member, friend, or spouse who can co-sign on your used car loan, there is a lower risk of nonpayment for the lender. A co-signer is generally not required but can be helpful especially for someone with no credit history.
- Proof of Income- Lenders want to know how you are going to afford your car payment. They frequently ask for your 2 most recent pay stubs as proof of your employment and income.
- Proof of Residence- This one is easy- just bring a utility bill or official document showing your address.
- List of References- In some cases, lenders may require a list of 5-8 references. These references may be friends, family, or even coworkers. This gives the lender another way to confirm your employment as well as a way to find you if there is an issue with payments.
How DriveHubler Certified Pre-Owned Helps Car Buyers with Bad Credit- No Buy Here Pay Here Required!
As a part of the Hubler Automotive Group, DriveHubler Certified Pre-Owned has been a trusted member of the Greenwood community for years. We have an excellent reputation of helping drivers from all financial backgrounds find reliable vehicles with easy and competitive financing. Our special finance team works with over 40 reputable lenders- many specializing in subprime credit- to bring you more options for low rates and flexible terms. We have decades of experience in subprime credit financing, so we know exactly how to secure the best approval for your specific credit situation. When it comes to bad credit auto loans- we've seen it all! Just tell us what you are looking for and we will search our vast inventory of over 1,200 pre-owned vehicles to find the one that meets your needs and is approved with a real lender. We have already helped thousands of drivers around Greenwood and Indianapolis build their credit while driving the car, truck, or SUV they wanted.
Frequently Asked Questions (FAQs)
Yes, many lenders specialize in working with customers who have bad credit, no credit, or past financial challenges. At DriveHubler Certified Pre-Owned, we work with banks and credit unions that are experienced in subprime financing, giving you more options than you might expect. You can get started with our online credit application.
Most lenders will ask for basic information such as proof of income, a valid ID or driver’s license, proof of residence, and sometimes references. The process is usually straightforward and designed to help you get approved quickly. Depending on your situation, a down payment/ trade vehicle or co-signer may be necessary as well. Getting pre-approved online before your arrive at the dealership can help our finance team make a plan ahead of time on what would be required for your approval.
Yes, as long as your loan is through a lender that reports to credit bureaus. Making consistent, on-time payments can help improve your credit score over time and strengthen your financial profile. This can make approval for loans much easier for you in the future. If you purchase from a Buy Here Pay Here lot, your payments may not be reported to the credit bureau.
DriveHubler Certified Pre-Owned at 880 US-31 S Greenwood, IN works with dozens of reputable lenders including Capital One, Everwise Credit Union, Chase, and more. Some of our lenders like Westlake and Santander specialize in subprime credit specifically. We do not offer buy here pay here financing.
About DriveHubler Certified Pre-Owned
DriveHubler Certified Pre-Owned is a pre-owned dealership located at 880 US-31 S in Greenwood, Indiana right next to Rural King. DriveHubler is located just south of Indianapolis and serves central Indiana communities including Southport, Martinsville, and Whiteland. As a part of the Hubler Automotive Group, we offer over 1,200 pre-owned vehicles of all makes and models. We specialize in financing for all credit types. Most of our inventory includes Hubler's Q Certified warranty. Visit us today or call us at (317) 743-1700 to schedule your visit.
