Loans have formed a fundamental part of human civilization as it is both of importance to individuals and commercial organizations at large. This is due to the fact that loans give you access to property and materials you can’t buy straight out of your finances. In-house financing is a type of loan designed for the benefit of individuals and commercial organization.
READ: Finance Degree – Type, Courses, Jobs, Salary
There are different types of loans with their advantages. It is however safe to say that some loans require simpler processes than others. In-house financing is arguably one of the easiest loans that can be used to make purchases of properties from the sellers. In-house financing comes as a type of seller financing with a little difference.
In-house financing is a type of loan in which the firm provides a loan for its customers without any financial sector support allowing them to purchase it’s good or services.
In-house financing interest rate and its working isn’t too common because it has been determined to be too advantageous to the customers but automobile businesses make use of it. Offering a car buyer in-house financing allows the automobile dealer complete more deals and ultimately get more customers. Automobile dealers can effectively increase the number of customers they have because they are able to set their own standard of underwriting. This means they can allow lower credit score acceptance from customers who would easily be turned down by the bank. Basically the firm wants the comfort of its customers and so it handles the finances itself. In-house financing has a lot of benefits which are going to be discussed in this article.
In-House Financing Benefits
- Allows for a personal experience.
In-house financing eliminates the third-party, this means that the business, transactions and all negotiations will be just between you and the dealer. This allows for a smoother business transaction. It also promotes a form of personal relationship between the seller and the buyer. This will ensure that you don’t just get involved in a one-time relationship with the dealer. The form of relationship it creates will promote future transactions between the dealer and the buyer.
READ: MOD accounts in Banks – Multi Option Deposit | SBI, PNB, HDFC
- Absence of credit discrimination.
One advantage of in-house financing dealership is that you and the dealer will get to determine or negotiate a financial agreement for your installment payment (monthly). You dealer will carry out a credit check on you, but you can be sure that a lot more is taken into account than just your credit score. This means even if you have a bad or low credit score, there is a high probability that you and your dealer will reach a sort of agreement that will suit both parties.
- More realistic
In-house financing dealership ensure that you don’t exceed the limits of your financial comfort. A third-party may not ideally care about the strains to your personal income and would let you pick any property of your choice but your dealer won’t allow that. To avoid running into a loss, your dealer would ensure that you reach an agreement about what you can afford before you pick the property of your choice. This realistic approach will always serve to remind you of your financial capacity before agreeing to any deal that may be harmful to your income. This way you can get the property you can afford and still be able to pay back.
- More flexibility.
Your budget limitation does not translate to a lack of choices. Your dealer would more often than not be accommodating. Your dealer will provide you with flexibility in your choices and your installment payments. This would stress you less financially and means you aren’t stuck to a corner with limited choices and an impossible payment plan.
- Credit reporting.
You should do well to find out if your dealer reports to any credit bureaus.
READ: Leveraged Financing – Analyst, Interview Questions, Hours
As indicated above in-house financing will serve to do you a lot of good if you are short on finances in getting that next property you want. It would do absolutely no harm in contacting a dealer today to start enjoying the benefits.
Note: In-house financing is used mostly by car dealers.