Buy Here Pay Here Financing | How it Works

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What Does "Buy Here Pay Here" Mean?

When you don't have cash available to buy a car and have been turned down for a car loan, don’t overlook the option of buying a car from a Buy Here Pay Here car lot. A Buy Here Pay Here dealer can help by setting up an In-House financing plan. Here's what to expect at a Buy Here Pay Here car lot.

A Buy Here dealership can help you get the car you want regardless of your credit situation. Getting approved for Buy Here Pay Here financing is much easier than working with a traditional dealership. You can make all loan arrangements and make payments on the purchase at the same dealership you purchased the car. The dealership acts as a one stop shop for buyers that need financing since the seller is also the finance company.

Financing plans from a Buy Here Pay Here dealer do come at a cost, however. Since you are classified as a ‘high risk’ borrower, you may be paying higher-than-average interest rates through a Buy Here Pay Here financing program.

Still, getting approved means you can finally purchase that car you’ve had your eye on and keep the vehicle as long as you make payments on time. Another benefit of purchasing from a Buy Here Pay Here dealer is they may be willing to take in your older car as a down payment for the purchase. Your Buy Here Pay Here financing options could be that much more affordable with a trade-in allowance.

4 Tips for "Buy Here Pay Here" Car Dealerships

If you are among the twenty percent of people in the US that has a credit score below 620, buying a car might seem like somewhat of a daunting task.

In your search for an auto loan, you may have considered a Buy Here Pay Here dealership; an auto dealer that essentially acts as a bank by offering loans In-House to buyers with bad credit. These buy here pay here dealers can offer an alternative to the traditional route of securing an auto loan, but they can also be trouble if you don't know what you're getting into.

Since buying a car with bad credit can intimidating, it also puts you in a potentially precarious position in terms of negotiating a fair price. That's why it's always good to do a bit of homework before going in.

For that reason, we've compiled our list of 4 of our tips for purchasing a car at a "Buy Here Pay Here" car dealership.

Tip 1. Save as much as you can for a down payment.

Although delaying a purchase may not be an option for everyone, the more you can set aside to put towards a down-payment, the lower the amount in interest you'll have to pay over the lifetime of the loan.

Tip 2. Do your homework on car values

This may seem self-explanatory, but it's actually often overlooked, especially if you're in a pinch and need a car fast. Make sure to check with third party sites such as Kelley Blue Book or Edmonds to research values of vehicles you are considering before signing anything. This way you'll make sure to get the best possible value.

Tip 3. Ask if the dealer reports to a credit bureau

This is key for those with less than stellar credit. If your Buy Here Pay Here auto dealer does report, on-time payments will help rebuild your credit.

Tip 4. Take a test-drive to a trusted mechanic

Because most cars that you'll find on a Buy Here Pay Here car lot will be used/pre-owned, it's always a good idea to get a second opinion on the condition. The dealer may certify the vehicle and tell you that it's in great shape, but a second opinion will help you verify that.

Buyer Beware: Top "Buy Here, Pay Here" scams

Purchasing a new vehicle is one of the most exciting and significant purchases you can make, but getting scammed can turn the experience into a nightmare. While car consumers are protected by government regulations, not all business practices are created equally. Here are five Buy Here Pay Here car lot scams to look out for.

No Vehicle History Report

If a buy here pay here dealer glosses over the car's history or insists it's in mint condition without offering proof, beware. Demand a vehicle history report from a service such as Carfax or Experian to get unbiased information on the vehicle, or check the vehicle identification number to learn about the car before deciding on a purchase.

Spot Delivery

"Spot delivery" is a technique where a Buy Here Pay Here dealer may let you drive the car off the lot before you're officially approved for financing, then calls back and demands more money or says you need to renegotiate the loan. To protect yourself, don't take the car until you are fully approved, and keep track of all your paperwork and everyone you speak with. Do not park the car at the dealer should you return, since the Buy Here Pay Here dealer could lock you in and repossess your car. Bring a witness with you for your buy here pay here dealings to serve as an advocate, and consult a lawyer if you suspect you're being scammed.

Inspection Refusal

To ensure you're getting the vehicle a Buy Here Pay Here dealer insists they're offering, ask to have a mechanic inspect the car. If they're refusing to let you have the car inspected with your choice of mechanic, be wary. For tips on steps to take before you buy, check out the FTC's recommendations.

Hidden Fees in the Fine Print

Get the deal you deserve and agreed to by carefully reading everything listed in the contract from a Buy Here Pay Here dealer. Besides adding fees for administrative, inspection and delivery tasks, make sure the price is the same as was discussed. Do not sign the contract until all your questions are answered.

Finagling Financing

Make sure you're paying only what you can afford with Buy Here Pay Here financing by calculating potential interest rates and down payments. State laws put caps on interest rates, which the buy here pay here dealer is obligated to follow.

Protect yourself from a Buy Here Pay Here dealership scam by conducting thorough research on the vehicle you're considering by using a non-biased comparison site such as Kelley Blue Book, Edmunds or J.D. Power. Choose a buy here pay here dealer that is accredited by the Better Business Bureau and has strong customer testimonials to get you on the right track and on the road with a high-quality car.

All information provided on this site is for informational purposes only and may have come from other sources. DriveTime makes no representations as to its’ accuracy or validity, and it is provided on an as-is basis.
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