Buy here pay here has been around longer than most people may think. The only reason you’ve just heard of it is most likely because you’ve fallen into a bad credit situation. Buy here pay here wasn’t a choice and didn’t have to be an option until you fell into an unfortunate situation. It has been around for quite sometime.
Sometimes smaller is better
Buy here pay here dealerships are independent from bigger, franchise named dealers like John Elway, Medved or Emich. They set up their dealerships in all sorts of different places but usually in and around big cities as that’s where they can get the most exposure to customers with no credit or bad credit.
You can also find them in rural communities surrounded by small towns.
Your credit profile is how companies determine whether or not they can loan you money. The ideal credit profile is someone who has a steady job, low amount of bills, decent income in relation to the loan they’re taking out, steady living situation and limited legal obligations. They also take your past into account such as how often you were late on bills or if you defaulted on past loans. This all determines how likely it is you will pay on time or if you’ll default on future loans.
When you combine all of this you get assigned a credit score and that’s the main factor in determining whether or not they can finance you. In the past with a 600 credit score, decent job stability and decent living situation you could get financed for a new car.
Ever since the economy took a dive in 2008 with the housing crash and all companies became much more choosy with their financing terms. You now need a 700 score and above to get financed for a newer model car and often times need around $1,000 down payment.
Financing for the rest of us
That’s where buy here pay here comes in where they focus on financing people with bad credit. Everyone who has a credit score between 500-600 can get financed at a buy here pay here.
In the past, buy here pay here dealers took all sorts of things as down payments. In rural communities they took in livestock, food, goods, gold, jewelry or anything else they deemed worthy of a down payment. Most of them only accept cash down payments in the $99 or more range.
Buy here pay here car lots usually took a back seat to franchise dealerships and weren’t mainstream until very recently. Now there are some bigger, franchise dealers who have joined in on the buy here pay here game such as J.D. Byrider, Carhop, Drivetime, Carmart and local chains such as Best Car Buys.
More and more people are getting into the buy here pay here game because financing parameters are much tighter than they used to be. There are more people who need cars that also have bad credit than ever before. Bad credit happens to good people and buy here pay here is a good way to get out that situation.
Because buy here pay here don’t usually deal with a bank and finance you directly at the dealership they aren’t required to report your credit history. Banks automatically report your payments while buy here pay here dealers do not.
Things have changed and most buy here pay here car lots report their payments to help their customers rebuild their credit profile. Not all of them do it but you should only go to the ones that do.
In the past it was easy to con people into buying cars that had problems. There weren’t as many laws protecting people from getting ripped off through false VIN scams. Nowadays the title work is protected but vehicles are still as is no warranty expressed or implied. By law anything that goes wrong with a car once you leave the car lot is your responsibility to fix.
Dealers buy cars and sell them as fast as they can. They’ll check them over for problems, but they don’t have the time or the resources to take them on rigorous drives to see if something will fail.
The way to protect yourself is to take test drives and to enlist the help of an experienced mechanic to look it over before purchase. Yes, it will probably cost you some money, but probably not as much as a clunker will if you end up with one of those.
This doesn’t mean you aren’t protected. Most buy here pay here dealers want return business so they will do everything in there power to make sure the car, truck or SUV is up and running perfectly before being sold off. Some dealers will also protect you up to a certain point or offer up a temporary warranty for a month or 2 months so if anything goes wrong they will fix it or put you into another car.
You can also buy a warranty from an outside company which is most likely the preferred method.
Buy here pay here have always been a little more expensive than other dealerships. While this isn’t ideal it can actually work in your favor a bit. If your only choice is a buy here pay here you can use it as a place to rebuild and raise your credit score to a point where you can get lower interest rates and payments once your done paying off the car loan.
Buy here pay here loans are considered high risk for a variety of reasons. The good thing about this is that because they’re high risk they are short term so you’ll own the vehicle much faster than if you finance at a traditional dealership.
Higher but Shorter
Your payment will be higher, but once you pay your car off, in less than 2-3 years, it’ll depreciate less than if you had a 4,5 or 6 year loan. Everyone knows that a car loses it’s value faster than just about everything else. Why not pay it off faster so you can re-sell it for a lot more than if you owned it for 2-3 years longer? You may pay more up front to retain more value over the long run.
This won’t work unless you go to a buy here pay here lot that reports their payments. If they don’t report their payments then it’s best to just avoid them and shop at another used car lot.
At the end of the day if you go to a buy here pay here you should make sure you’re dealing with people who actually care about your livelihood and are understanding of your situation.
Buy here pay here can be a place you go that helps you get back on your feet so you can save thousands over the long run.