Buy here pay here (BHPH) dealers provide a convenient service to car buyers, especially those who have bad credit but need a car in a hurry. However, shopping at BHPH car dealers can sometimes be stressful, especially if you don’t know what to expect. It takes more than just an online search for ‘buy here pay here car dealerships near me’ to make sure that you get the best bad credit auto loan from these dealerships. Here’s what you need to know about buy here pay here car dealers and the financing options they offer.
Buy here pay here dealers offer convenience to car buyers, but this convenience comes at a cost. Most BHPH car dealerships provide financing at higher-than-average interest rates. You may come across buy here pay here financing options with interest rates as high as 21%. These financing options come with higher interest rates because BHPH lenders assume that people with bad credit are more likely to default on their loans. Repossessing a car can be expensive, and car dealers are trying to make the most profit they can.
For instance, you get financing from a BHPH car lot amounting to $10,000, with a loan term of 36 months. With an interest rate of 21%, you’ll have to make monthly payments of $376. If you’re looking to get car financing from a BHPH car lot, you’ll have to prepare a sizable budget.
Most BHPH car dealers have teams of in-house mechanics that prepare cars for purchase and service these vehicles when needed. Pre-owned vehicles from BHPH lots are generally reliable, but it’s always best to have the vehicle you want independently checked. Most buy here pay here car dealers will allow you to bring in your own mechanic to do his own inspection of the vehicle you want to buy. This way, you can get unbiased, more accurate information about the vehicle’s issues, if any. You might have to pay your mechanic for the inspection, but it’s a small price to pay for making sure that the vehicle you’re getting works properly.
If the BHPH car dealership doesn’t let you bring in your own mechanic, it’s best to walk away and find another dealership.
Many buy here pay here car dealerships regularly report your payment history to credit bureaus. If you’re diligent about making on-time monthly payments, the BHPH car dealer’s reports to credit bureaus will help boost your credit score and improve creditworthiness. A better credit score will help you get better interest rates the next time you need financing for buying a car. Of course, the opposite is also true. If you make a habit of delayed payments, your poor payment history also gets reported to the credit bureaus. This can affect your bad credit score even further.
Not all BHPH car dealers report to credit bureaus, though. If you’re looking to restore your credit worthiness, you want to make sure that the buy here pay here car dealer you choose reports to the major credit bureaus.
What’s great is that many BHPH car dealerships let you trade in your vehicle and have it count towards the down payment for the car you want. This is particularly useful if you have an older-model vehicle that you want to get rid of because it doesn’t suit your needs anymore. Bring your older vehicle to the buy here pay here car lot and ask the dealer if he’s willing to take your vehicle as down payment for your bad credit auto loan. Not all BHPH car lots may accept the trade-in deal, but it doesn’t hurt to ask.
This is a unique benefit when you buy a car at a buy here, pay here car dealership. Most BHPH car dealerships offer a 48-hour return policy, where you have 48 hours after purchase to return the car to the dealership if you aren’t satisfied. This 48-hour period gives you enough time to test-drive your new car on a variety of road conditions and to see if the vehicle’s performance has issues. You have no obligation to accept the offer if you choose to return the car within this period.