Clean Car's What is Buy Here Pay Here

What is Buy Here Pay Here?
Content Provided by Autotrader.com

If you've found that every other credit avenue for financing a car is closed to you, a Buy Here Pay Here (BHPH) dealer may be your last, and best, resort. Most of us simply can't afford to buy a car with cash. Typically, we borrow money for a car through third-party lenders, such as banks, credit unions and carmaker-associated lending companies. For a variety of reasons, however (such as a spotty credit history, no credit or a very low credit score), traditional lenders may not work for you. If that's the case, there are always BHPH dealers.

Happy woman at buy here pay here dealership taking vehicle for test drive with sales representative

What Is Buy Here Pay Here Financing?
BHPH financing means that you arrange the loan and make payments on it at the dealership where you purchased the car. In other words, it's a one-stop shopping process because the car dealer is also the finance company.

Because loan decisions are made by the BHPH dealer, who wants to sell you a car, approval is nearly always guaranteed. If you have an address and a steady income, your chances for approval are very good.

Granting you a loan, however, isn't out of the goodness of the dealer's heart; they will probably make as much, or more, profit on the financing as they do on the car itself. As a high-risk borrower, you can expect a double-digit interest rate.

It's helpful to find a dealer close to your home or work because, rather than mailing a monthly payment, the BHPH dealer might require you to make weekly or biweekly trips to the dealership to pay in person. Although some will accept payment online or by mail or phone, BHPH usually means physically bringing your payment to the dealership.

Benefits of BHPH
  • They put credit-challenged borrowers in a car when a traditional lender will not.
  • On-time payments can help repair your credit history (but be sure that the BHPH dealer reports payment histories to the credit bureau).
  • They buy older cars and will be more willing to take in an old beater toward the down payment of a new car.

Original Source: Autotrader.com, September 2014, Russ Heaps

Five Buy Here, Pay Here Dealership Shopping Tips

Clean Car's Five Buy Here, Pay Here Dealership Shopping Tips
Content Provided by AutoInfluence.com

Buy here, pay here dealerships can be intimidating. High-interest rates, due to bad credit, a selection of only used cars, and a whole new way of buying a car might put you off from the experience entirely. But, it doesn’t have to be that way. If you follow these five tips, not only will it make getting a car from a buy here, pay here dealership easier, it will also make it less stressful.

Which is what everyone — dealerships and consumers — both want for a car-buying experience. After all, the less stressed you are, the easier it makes their job. The easier their job, the more efficient they can be. It all comes full circle in the end.

Finance manager calculating loan information in buy here pay here dealership

  • Learn the Car's Origin: I’m not saying all buy here, pay here dealerships are untrustworthy. Nor am I saying all of them are trustworthy. But just like any used car purchase, you’ll want to learn the origin of the car before purchasing it. The shopping process might be done differently, but there is nothing against looking at a CarFax report to learn about any mechanical trouble the car has experienced, or accidents it might have encountered. Therefore, you’ll want to make sure you check that out. If the dealership refuses to show you a vehicle history or CarFax report, then walk away and look for one that will.
  • Get in Inspected Independently: Same goes for an independent mechanic inspecting your prospective purchase – if the dealership won’t let you test drive the vehicle so you can see firsthand that the vehicle is in good condition, then don’t buy it. Chances are, the dealership is trying to hide something. Hey, it’s not just buy here, pay here dealerships that would do this. There are plenty of unscrupulous used car lots out there as well.
  • Short Term Financing is Key: Although it will be hard to negotiate terms because of your poor credit, still shoot for short term financing. That doesn’t mean a smaller amount with increased frequency of payments — you’ll already be paying bi-weekly, most likely — but I mean short-term financing of a relative low bi-weekly payment over the course of 32 months instead of 64. That way, you keep the interest rate down and save yourself some money.
  • Pay a Larger Downpayment in Cash: One of the best ways to reduce your payments? Simple! Pay a larger down payment in cash first. Just like “standard” car buying, the more you pay upfront, the more you reduce the overall loan term. Aim for at least 20%, and if the BHPH dealer requests more than that, consider it a good thing. Just make sure to negotiate short term financing if you are paying more than average on a down payment. This way, you’ll know for a fact the down payment actually put a dent in the overall price of the car.
  • Get What you Need - Not Want: Finally, get what you need — not what you want. If your budget is $14,000 and you find a used car that works for $7,000, then buy that one. Don’t get one that’s more expensive simply because it has heated seats or leather upholstery. Take that chunk of change you saved and put a big down payment on the cheaper car, and put the rest in the bank to help with repairs or get a jump start on paying off your loan. Eventually, your credit score will go up if you’re good with making the bi-weekly payments in cash (which is how most BHPH dealers take payments). Then, you can refinance the loan, pay that car off quicker, and upgrade to a new one.

Original Source: AutoInfluence.com, January 25, 2017, Roger Rapoza
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