How Do Buy Here Pay Here Dealerships Work?

You may have come across car dealerships with flashy banners that say “We Finance”, “We Are the Bank” or “Buy Here, Pay Here”. Ever wondered what these dealerships mean with their signage? Read on and learn more about buy here pay here car dealers.

What is a buy here pay here dealership?
A buy here pay here dealership is a used-car dealership that provides financing to car buyers with bad credit. Buy here pay here dealerships claim to be the bank because they don’t work with anyone in giving out auto loans to car buyers. They provide financing themselves. They are often characterized by hefty interest rates and payment terms that are different from a regular auto loan.

How do I know if a dealership is a buy here pay here?
Aside from the signage that says outright what kind of dealership they are, you can also ask if they have in-house financing. Some buy here pay here dealerships don’t put up banners so you can’t identify them right away, unless you go in and ask. But when you walk into the lot and they ask you what your credit score is, how much you can afford and things like that, leave immediately. That should raise a red flag.

What are the requirements I need to bring them?
If the dealership has a website, check if they have a list of requirements online. You can also give them a call. But some of the common requirements and pieces of information they ask are driver’s license, social security number, paycheck stubs or any proof of income and employment, down payment, most recent phone bill, references, proof of residence, and some financial information.

How is it different from regular auto loans?
Buy here pay here dealers find out first where you stand in your credit before they you the vehicles on their lot. This is because the price of the car depends on how much you can pay rather than its market value. After some assessment and complex computations, they will tell you which car on their lot you can buy. Once you get approved, you will make the payments directly to them at a bi-weekly basis.

What kind of interest rates do they offer?
Buy here pay here financing rates usually start at around 18 percent. The rates can rise up to more than 30 percent. Such high rates can be a major turn-off. But buy here pay here dealers are still here today because borrowers like single parents and people with really poor credit go to them.

Buy here pay here dealers give people with spotty credit a chance to get an auto loan and be able to buy a car. However, not many realize the huge risks until it is too late. Again, buy here pay here dealers charge exorbitant rates, not to mention the markup on the car price. If you have bad credit and your budget’s tight, think carefully and plan your finances first before actually approaching a buy here pay here dealer.


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