Buy Here Pay Here Explained

Buy Here Pay Here Explained

Shopping for a car can be both stressful and exciting for most people. It is one of the biggest purchases you’ll make in your lifetime. There is more information available than ever before but for whatever reason despite that it’s still easy to make a mistake.

But here pay here shopping can be even more confusing than if you go to a regular dealership. In a sense the buying process is backwards at a buy here pay here dealership. When you go in, there is a quick approval process first and foremost before you start looking around for cars.

If you are going to buy here pay here dealerships then you probably have bad credit, no credit or are a first time buyer. Because of this the buying process is based around your needs, rather than your desires.

Sleazy Car Salespeople?

The buy here pay here car salesman’s goal isn’t to sell you the most expensive car. It’s to find you a car you can pay off and afford.

A buy here pay here salesman doesn’t make commission selling you the most expensive car on the lot. Instead, he gets a flat rate for each car sold. For him to make any money he needs to sell volume and to do that he needs to find cars each and every customer can afford.

So, you can be assured that he (or she) is much more interested in just selling a car at any price – and moving on to the next customer, than to get the highest price on any individual vehicle.

Every Situation is Different

Every customer that walks into a buy here pay here dealership has a different credit profile. It’s not as simple as bad credit or no credit. Everyone is in a different situation and has different needs.

The end goal for every person should be to raise their credit profile to lower their interest rates. Doing so will save you thousands on your future loans. That’s one of the best things about shopping at a buy here pay here dealership.

While not all of them do so a lot of buy here pay here dealers now report your payments to all three major credit agencies. Doing so will raise your credit score and profile.

When Shorter is Better

Buy here pay here loans are short term which means you won’t have a car note longer then 3 years and often times less then 2. This means you can raise your credit score much faster then if you went to a regular car dealership. With a higher credit score you can get lower interest rates and lower payments.

There are a bunch of different types of cars at a buy here pay here dealership. Variety is important because of all the different credit profiles they have to deal with on a day to day basis. You’ll often find Honda, Toyota, Nissan, Ford, Pontiac, Saturn, Lexus, BMW, Ford, Chevy and Mercedes at most buy here pay here dealerships.

Not all buy here pay here dealers take the best care of their cars. You’ll save yourself a huge headache finding out which ones take care and service their inventory. The ones that do care about their customers. The ones that don’t only care about the money.

Shorter but Higher

While buy here pay here can help rebuild your credit score and also finance you when you have bad credit there are some downsides. The interest rates are usually high because the nature of the business is high risk.

Buy here pay here loans have a high rate of default and some people will damage their cars. This small group of customers that treat their cars poorly and default on the loan quickly are the ones who drive up the prices for everyone else. There have been customers that have taken off with inventory into a different state only to abandon it on the side of the road or part it out and sell the parts on the black market.

Buy here pay here dealers have to deal with a whole new world of problems that regular dealerships do not. This drives up the cost of business resulting in higher interest rates and shorter term loans.

Beyond that there aren’t many downsides to financing at a buy here pay here dealership. you can use it as a place to pay off a car and get back on your feet.

Sometimes buy here pay here gets a bad name but that’s only because of how it was when it first came around in the 1970’s during the savings and loans crisis. Back then there weren’t many regulations and it was like the wild west of used car sales. That image of a sleazy car salesman from the 1970’s with the plaid jacket is one that people still associate with used car dealers.

Whew! Lots of Rules and Regs

The buy here pay here industry is heavily regulated to protect the consumer. Some of the regulations include but are not limited to state and federal unfair and deceptive practice laws, state usury laws, the truth in lending act, the fair and accurate credit transaction act, the used car rule, the privacy rule, the safeguards rule, the disposal rule, the red flags rule, the risk based pricing rule, the fair debt collections practices act.

If you have any questions on how buy here pay here auto loans work or need help getting financed with bad credit give us a call today at (303) 623-1926