The large number of dealerships and banks out there offer a variety of things based on the different needs of different people. For those interested in buying a vehicle, it all can be a little confusing and a bit overwhelming. So when car shopping, why would anyone choose on the spot financing?
First of all, on the spot financing (also known as buy here, pay here) is a type of financing offered by certain car dealerships. Instead of getting a car loan from a bank, on the spot financing dealerships will not only provide the vehicle, they also arrange the financing you need for that vehicle. This service is usually meant for people who have bad credit. If they try to get a car loan from a bank or a traditional car dealership, they will be turned down because of their poor credit score. On the spot financing car dealerships provide the car and the financing to people who otherwise would not be able to get the financing for a vehicle.
In addition to providing a vehicle and the financing for that vehicle, certain on the spot financing dealerships give customers the chance to improve their credit. After purchasing a vehicle at the right dealership, if you can maintain good financial behavior, the dealership will report you to credit bureaus. For example, if you make your payments on-time, or end up paying off your vehicle early, this kind of good behavior will be reported to credit bureaus, thus, raising your credit score. If you make enough on-time payments, your credit score could possibly get so high that you may able to get approved for loans from banks and traditional car dealerships in the future. There are actually success stories out there about people who were once customers at on the spot financing dealerships, and now are home-owners and buy their vehicles at traditional car dealerships. It’s actually not out of the question that this could happen to you as well. The key is to maintain good financial responsibility so that you gradually raise your credit score.
To sum it all up, people who have bad credit choose on the spot financing so they have a much better chance of getting car than they would at banks and traditional car dealerships. Plus they have the chance to rebuild their credit so they may be able to have a brighter financial future.