What is in-house financing or 'Buy Here Pay Here' Dealerships?
In-house financing, also known as Buy Here Pay Here Dealerships, means that the auto dealership is going to personally lend the money for you to purchase the vehicle. This opens up approval opportunities for more Canadians who would otherwise have been turned down. Many Canadians have misconceptions about who they borrow money from when they purchase a vehicle at a dealership. Here are the two most common types of auto finance situations.
Non in-house financing
In this scenario, when the vehicle is purchased from the dealership, the money for the purchase comes from a third-party lender. These lenders can include a variety of prime lenders including, but not limited to:
- TD Bank
- RBC
- Scotia Bank
- Various Credit Unions
- BMO
- Ford Credit
- Ally
Traditional lenders like these are only concerned about the loans, and not about getting you a car, so they will have more strict requirements for approval. Buy Here Pay Here dealers want your business, so they're often more open to working with people who have less-than-perfect credit.
There are also non-prime or subprime auto finance lenders:
- CarFinco
- Scotia Dealer Advantage
- TD Non-Prime
- Rifco
When you purchase the vehicle the money is given to the dealership for the vehicle from one of the above (or other) lenders. You then make payments back to the lender for the purchase amount plus any agreed on fees and interest.
Buy Here Pay Here dealerships
Sometimes an applicant will not qualify for any of the available lender’s programs. For a lot of Canadians this the end of the line for options. Unless the dealership has in house financing. When a dealership has in house financing, also known as "Buy Here, Pay Here" they are going to lend you their own money. You will then be making payments back to the dealership each month, as opposed to a third-party lender.
Pros of in-house auto finance (Buy Here Pay Here)
- Often able to obtain financing when other means have failed
- Convenience of making payments back to the dealership you purchase the vehicle from
- Vehicle options may be limited
- Down payment may be required (not always)
- Dealership may not report payments to credit bureau (always confirm this as positive repayment history will help build your credit).
Cons of In House Auto Finance (Buy Here Pay Here)
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