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What is a “no credit check” or “buy here, pay here” auto loan or dealership?

When a dealership advertises “no credit check” or “buy here, pay here,” they typically finance auto loans “in-house” to borrowers with no credit or poor credit.

If you’re shopping for a car, there are a number of ways that you can finance an auto loan. You can work directly with a bank or credit union, get dealership-arranged financing, or go through a “no credit check” or “buy here, pay here” dealership that finances the loan in-house.

What is a “no credit check” dealer or loan

“No credit check,” “buy here, pay here,” or “military E-1 and up” dealers tend to advertise to people who have no credit history or poor credit. The interest rates, however, tend to be higher than loans from a bank, credit union, or other lenders. Higher interest rates ultimately increase the amount of money you’ll pay over the life of your loan.

Buy-Here/Pay-Here dealers may also market themselves as a way to rebuild your credit. However, they often only report or furnish negative information like late payments, and not positive payment information to the credit reporting companies. This means that your efforts to make on-time loan payments may not help improve your credit, but a late payment will hurt your credit. If you decide to work with one of these dealers, though, you can ask for them to put in writing that they will report your on-time car payments.

See different ways to get an auto loan

You have several options to consider when buying a new car or getting an auto loan. Learn how they can affect your overall money picture.

Read more about the ways to finance your loan