Buy Here Pay Here
What It Is
Buy Here Pay Here car dealerships offer in-house auto financing to customers with very bad credit. Lending institutions, and even other dealerships, will not offer these borrowers a loan because their credit is too poor to take a risk that the prospect fails to repay the loan. So the Buy Here Pay Here dealership sees this opportunity to make more money by selling the vehicle in addition to financing it. They will often make 2-3 times what they paid for the vehicle when they make a sale, and interest rates on the auto loan can be over 20% APR.
How It Works
For example, a Buy Here Pay Here dealerships will list a car for sale at $4,995. You would like to purchase this car, so they require a $1500 down payment to cover potential loss if you fail to make a payment. As for financing, you need to make regular weekly payments of around $50 to the dealership. Once your paycheck comes, the dealership expects its payment as well. If you do not come up with the payment they will repossess you vehicle soon after. This process might not be pretty, but it can be advantageous for consumers that are in a bind.
Beware: Some Buy Here Pay Here used car dealerships have been accused of taking advantage of military personnel by selling them poor quality vehicles. Once purchased, this car begins to break down. Then the military service member quits paying the lender because the car is a lemon. As the lender, the car dealership then will have the service member’s vehicle repossessed. The dealership then sells this car again, to another unsuspecting soldier, and the scam cycle continues.
In general, Buy Here Pay Here used car dealerships prosper because you are in a bad position with few options. You have poor credit, you need a car, and no lending institution will finance a car for you. You have probably made some poor decisions along the way so do some homework before you try one of these dealerships. They might not be reputable, and can make your bad situation worse.
There can be another way to finance you car purchase. Try setting up your next auto loan with us by simply filling out our quick-and-easy online questionnaire. Within hours you will receive decisions on your pending car loan.
Discover how easy and fast you can get a car loan when you buy your next vehicle.