Guide to In-house Loans for Foreigners Buying Cars in Japan

Introduction

In-house loans (自社ローン) are frequently used as an option when purchasing used cars. However, they differ from regular auto loans in terms of approval criteria, and many people may not fully understand their mechanisms, advantages, and disadvantages. In this article, we will explain in detail what in-house loans (自社ローン) are, their features, benefits, and points to watch out for.

What is an In-house Loan (自社ローン)?

Definition of In-house Loan (自社ローン)

An in-house loan (自社ローン) is a payment method in installments provided directly by a used car dealership. Unlike typical auto loans, they are not arranged through credit companies or banks. Instead, the dealership offers installment payments directly to the customer. As a result, there is no interest rate as a financial product, and no credit information screening is involved.

Features of In-house Loan (自社ローン)

• No Credit Company Involvement: Since in-house loans (自社ローン) are provided directly by the dealership, there is no need to pass a credit company or bank screening.
• Unique Approval Criteria: Dealerships evaluate customers based on their current situation and personality. Therefore, even if there are issues with past credit information, it is still possible to pass the screening.
• Same-day Delivery Possible: Due to the fast approval process, same-day delivery may be possible in some cases.

Benefits of In-house Loan (自社ローン)

Available Even if You Don’t Qualify for an Auto Loan

The biggest advantage of an in-house loan (自社ローン) is that it can be used even if you don’t qualify for an auto loan. While financial institutions have strict approval criteria, in-house loans (自社ローン) use the dealership’s own criteria and don’t emphasize credit information. As long as you have a stable income, you are often approved.

Fast Screening and Procedures

Since the dealership directly conducts the screening, the results come out quickly, allowing you to avoid delays and get your car sooner.

Often 0% Interest

In many cases, in-house loans (自社ローン) come with 0% interest. This is because instead of setting an interest rate, dealerships include an equivalent amount in the vehicle price. Although the total amount paid may not change, it makes monthly payments easier to understand.

Disadvantages of In-house Loan (自社ローン)

Potentially Higher Vehicle Prices

Since there is no interest with in-house loans (自社ローン), the vehicle price may include an amount equivalent to the interest. This could lead to a higher total payment.

Shorter Installment Periods

In-house loans (自社ローン) often have shorter installment periods to minimize risk for the dealership, which can result in higher monthly payments.

Difficulty Purchasing Luxury Cars

Due to the higher risk borne by dealerships, purchasing luxury cars with an in-house loan (自社ローン) may be difficult. However, if you build a relationship of trust with the dealership, it may become possible.

How to Use an In-house Loan (自社ローン)

How to Find Dealerships Offering In-house Loans (自社ローン)

There are many used car dealerships offering in-house loans (自社ローン), but choosing a trustworthy dealership is crucial. Pay attention to the following points when selecting a dealership:

• Proven Track Record: Dealerships with a long track record are considered more reliable. Check reviews and testimonials.
• Offers 0% Interest: Dealerships that offer in-house loans (自社ローン) with 0% interest are attractive to customers.
• Variety of Available Cars: Choose a dealership with a wide selection of used cars that support in-house loans (自社ローン).

Documents Required for Screening

The documents needed for screening with an in-house loan (自社ローン) include:

• Identification (driver’s license, etc.)
• Proof of income (pay slips, tax statements, etc.)
• A resident certificate or utility bill (for address verification)

Tips for Passing the Screening

• Stable Income: Having a stable income is important when applying for an in-house loan (自社ローン). Even part-time or temporary workers can be approved as long as their income is stable.
• No Emphasis on Past Credit Information: Even if you have a history of debt settlement or bankruptcy, you can still pass the screening if your current income is stable.

Comparison of In-house Loans (自社ローン) and Auto Loans

Differences in Approval Criteria

In-house loans (自社ローン) are based on the dealership’s own approval criteria and do not place much importance on credit information, making it easier to pass the screening. On the other hand, auto loans require approval from credit companies or banks, and it may take longer to receive the results.

Differences in Payment Periods

In-house loans (自社ローン) typically have shorter payment periods, while auto loans allow for longer-term installment payments, which can lower monthly payments.

Differences in Available Vehicle Types

In-house loans (自社ローン) may make it difficult to purchase luxury cars due to risk management by the dealership. On the other hand, auto loans allow the purchase of luxury cars if the customer has good credit.

Conclusion

In-house loans (自社ローン) are an effective option for people who cannot pass the screening for auto loans. Their unique approval criteria and fast processes are appealing, but it is important to be aware that vehicle prices may be higher and installment periods shorter. It’s crucial to choose a trustworthy used car dealership and fully understand the features of in-house loans (自社ローン) before using them. We hope this article helps deepen your understanding of in-house loans (自社ローン) and assists you in making the right decision.