Many people refuse to buy from a buy here, pay here (BHPH) dealership — even if it’s an easier option for them — simply because of what they’ve read online or have heard from friends. High interest rates, cheap cars, and sales associates that are looking to trick you in every word of the contract. Don’t just assume that this is all true, because while some dealerships will try and use terminology that doesn’t trigger the required disclosures (more on that later) of the Truth in Lending Act (TILA), others would rather not put in the time and effort. Instead, they’d rather focus on helping you out as best they can. After all, one of the best ways to have a lucrative relationship with a consumer is to keep them happy so they’ll keep coming back, right?
Yes, the TILA still applies to buy here, pay here dealerships. If they violate it, they’re held accountable — just like the other dealerships.
What is the TILA?
The Truth in Lending Act is a federal law that’s designed to protect consumers during any credit transactions. It requires the clear disclosure of key terms in the lending arrangement, along with all the costs laid out for the consumer.
The purpose of the TILA is to promote the informed use of consumer credit by requiring ANY and all disclosures about the terms and costs. Basically, it’s to prevent a car dealership or other lender to pull a fast one on you, and sucker you into something you didn’t want.
Found in Title 1 of the Consumer Credit Protection Act, TILA is divided into two regulations: Regulation Z, which has to do with buying, and Regulation M, which has to do with leasing. Therefore, a BHPH dealership falls under Regulation Z.
How Does TILA Hold the Dealership Accountable?
Simple! The purpose behind Regulation Z is to allow consumers to make an informed decision when using credit. It prevents the BHPH dealership from selling them something without informing them of the disclosures early, in writing, and on a form that the customer can keep.
When reading, you’ll want to ask the dealer questions. Why? Because, there are certain terms that require the dealership to disclose other items. Seeing things like the amount of percent of down payment, number of payments or period of repayment, amount of any payment, or the amount of any finance charge are considered triggering terms, and must include the following:
Amount or percent of the down payment;
Terms of repayment, including balloon payments;
The APR, and if that rate is subject to increase.
This is how the dealership is held accountable, and ensures that you are truthfully seeing the conditions under which you’re buying that car. They can’t (legally) hide anything from you, nor are they able to (legally) change the payment amount in the middle of your loan term, unless otherwise stated.
The Point is…
Even though the TILA has been around for a while, it’s increasingly harder to buy here, pay here dealerships — or car dealerships in general — to trick consumers in 2016, thanks to this enhanced accountability, lest they incur penalties and must then pay a pretty penny for their intended ignorance of the rules and regulations.
The point is, it’s never been a safer time to buy a car from a dealership in 2016. If you have bad credit, take advantage of this knowledge and take out an auto loan without fear. Just remember – if the dealership does try and pull a fast one on you, you are able to take the issue to court.