What is a Buy Here Pay Here Dealership?

Buying a car can be challenging if you have bad credit or no credit at all. That’s where buy here pay here dealerships come in. With this type of dealership, your credit rating doesn’t matter. It’s the dealership who gives the credit to the consumer, instead of a finance company. They make loan payment arrangements with the consumer right there at the dealership. These dealerships will usually give this type of credit to anyone who has a steady employment history.

These dealerships buy vehicles that are less than perfect from various auctions and new car dealerships. They then recondition them and resell them on their own lot. To finance a vehicle this way, a large down payment is usually required. If you manage to finish all payments for your purchase, then at the end of the contract, the title is transferred over to you. They charge a larger down payment to cover their initial cost of the car. Then the financed amount contributes to the dealer’s profit.

One of the unique aspects of these dealerships is that they will often require you to bring your paycheck to them every pay period. The dealer takes the payment and returns the balance of the paycheck to the buyer. The term for these loans is usually 24 months.

What Are the Advantages and Disadvantages?
People who have had trouble getting financed in the past may gravitate towards this type of dealership. Often, people who have credit problems are frustrated from being turned down after getting their hopes up many times in the past. When using a Buy Here Pay Here dealership, you can expect the usual buying process to be reversed. Instead of looking at cars first before talking about your financing options, you can expect to sit down and discuss your payment and credit history first. That way the dealer can help you find a vehicle that is within your budget. These dealerships can often be the only option for some low-income and poor credit customers. They take your budget into account before the deal is even made, so you have a little more say in what your monthly payments will be, and more control over your options before making a purchasing decision. As a consumer with bad credit, these types of dealerships can make your life easier by providing you with more financing choices than what was available with a traditional dealership.

Because these dealerships don’t check your credit rating, they also rarely report your payment history to the credit reporting agencies. This can be both good and bad. If you’re late with your payments to them, it won’t hurt your credit rating any further. By the same standard, if you need to build up your credit rating, as these dealerships don’t report your good payment history with them, then your credit rating is not going to improve through this loan. If your goal is to improve your credit rating, then try to get an auto loan from somewhere else.

The main disadvantage that consumers face when dealing with these dealerships is the fact that they use the credit factor to their advantage in order to charge a higher interest rate. They can charge much higher interest rates than are typical, with some as high as 26% or more

Bringing the correct documents to the dealership can dramatically speed up your purchase process. Although the list of items can differ depending on your unique credit situation and each dealer. To find out exactly what to bring, call the dealership before you visit. They’ll help you pull together everything you need.