If there is one thing even the dimmest bulb in the box knows about cars, it’s that they are expensive. Some go through the hassle of attempting to get a loan, while others just go to the bus. In reality, though, you don’t have to go through either of these options if you discover a dealership that offers the convenience of a buy here pay here, or BHPH, service.
What is Buy Here Pay Here?
The amount of buyers that know little or nothing about BHPH is fairly disheartening considering how much good it can do for those in need of a car who can’t afford one or don’t have time for a lengthy process. Buy here pay here is a way to avoid third-party involvement in your auto purchase by having the dealership arrange loans and payments directly from them. This allows the dealership to become a one-stop-shop making your experience all the more convenient. Be careful to not do this from a dealership that is too far away though since some dealers will require in-person visits for their BHPH payments.
What really makes this process so helpful is that it is a loan given by the ones who want you to buy their product. This means denial of a loan is very unlikely. It also helps the dealer in the long run as well by allowing them a chance to make even more money in interest. This can make some buyers feel rightfully cautious of the practice, but the National Independent Automobile Dealers Association put out a statement saying “the fact of the matter is that while there are some unscrupulous dealers out there, the BHPH industry is generally comprised of honest and hard-working small business owners.” Which makes sense since no matter the group there will always be a less humanitarian side. With that said, it honestly is a process that can aid everyone involved if done with care.
Differences Between BHPH and Regular Dealerships
You most likely will never notice a “Buy Here Pay Here” sign on any car or dealership, but there are plenty of phrases such as “We Finance” which commonly imply BHPH financing. One big difference between these types of dealerships and ones that do not participate in buy here pay here is that there will often be a limit on your car selections. A BHPH dealership often requires an information check before deciding on the loan and then will tell you which options you have from their assortment. That does not mean this limitation does not come with its benefits.
Benefits of BHPH?
Not every BHPH will include these, but for the most part here are the some of the top benefits they will offer.
Convenient Funding
Clearly, the biggest notable benefit of buy here pay here is the convenience of its funding system. Those who are credit-challenged or on a strict budget and left with no other option will always be able to get the transportation they require at these dealerships.
Fast Funding
Time is almost as precious, if not more precious, than money. It seems illogical to buy a car to save commute time by wasting time. That is why this process is all about getting you a payment option with no middleman.
Reasonable Down Payments and Payments
It makes sense that since they desire loyalty from their customers and understand the financial situation of those buying, a BHPH dealership will make payments as reasonable as possible. They would be just as unhappy as the customer if they were given a payment that can’t be delivered.
No Long Commitments
Buy here pay here often allows you to pay off your vehicle as quickly as you desire so you are not required to say in any long-term agreements that will stick to you and the dealership for life.
Flexibility with Insurance Coverage
Some BHPH dealerships will work with you to provide a plan that allows you to carry just liability with your insurance company.
Improving Credit Score
Clearly, loans are not often a great way to improve credit, but if you are a timely person, this should not be a problem and will even boost your credit if done correctly.
Quality Vehicle Choices
BHPH dealers should never fear being asked about their warranty policy, inspection standards, vehicle reconditioning, and onsite maintenance and repairs availability. Even if your credit only allows for a limited selection, BHPH dealerships will often do their best to give quality vehicles. Some will even offer free oil changes to be sure you stay up and running during your investment time, even if simply to keep their reputation as an auto financer.
Things to Lookout for
As sad as it is to say, not all people are upstanding citizens. In a process such as this, you must always be observant. That’s not to say no one can be trusted, but that it can happen so be prepared if you choose this path. Here are some of the essential flaws to look for.
Hidden Fees
Once you sign the contract its official, so be sure every payment in it is legitimate.
Interest Rates
Depending on the dealership your buy here pay here financing could have a very hefty loan that may deter you if are not planning to pay consistently or come into money.
Limited Selection
With BHPH you are working with the good graces of the dealer. This means you can only afford what they give you. That being said, most will provide a quality vehicle, and those that don’t are generally easy to spot as long as you do an inspection.
Who is Buy Here Pay Here for?
There is nothing wrong with being unsure of the right way to go about an auto purchase. It may not be rocket science, but it also is no quiet summer stroll through the flowers. So, to help provide a bit of perspective here are some of the qualities of those most qualified for buy here pay here financing:
- Refused by dealerships
- Have a credit score less than 690
- Low or zero income
- Bankrupted at some point
- Had a car repossession
- A brand new buyer with no credit
Buy here pay here may not be everyone’s first choice, but it can at times in this difficult economy be the only choice left. On the bright side of things with a clear mind, cons are avoidable, and the benefits are a lifesaver.
