Buy Here Pay Here Car Lots
Myths about Buy Here Pay Here Car Lots
Have you considered financing your next vehicle at a Buy Here Pay Here dealership? This could be a viable option if you have poor or no credit, but there are several misconceptions about Buy Here Pay Here dealers that could be hindering you from moving forward. Here are some common myths about Buy Here Pay Here car lots you should be aware of:
Myth #1: Auto loans from Buy Here Pay Here car lots won’t help your credit.
Most Buy Here Pay Here dealers only require funds for a down payment and a steady stream of income to approve you for financing. So even if you have subpar credit, you will still qualify for a loan. However, many Buy Here Pay Here dealerships report account activity to the credit bureaus, which will definitely help your credit score if you make timely payments each month.
Myth 2: Buy Here Pay Here dealers automatically repossess your car if you make a late payment.
You will incur a late fee for remitting a payment after the due date, but this doesn’t necessarily mean the repo guy will arrive at your door the next day to pick up your vehicle. Some Buy Here Pay Here dealerships may be willing to make arrangements with you if you are experiencing a financial hardship. However, you should keep them in the loop and reach out before the due date rolls around.
Myth #3: Buy Here Pay Here lots sell unreliable, outdated cars.
Reputable Buy Here Pay Here dealerships offer safe, used vehicles that come with an extended warranty. In addition, some Buy Here Pay Here dealerships also conduct extensive mechanical inspections prior to putting the car on the market to ensure its safety and reliability.
Myth #4: Buy Here Pay Here dealers require a hefty down payment.
You’ll more than likely have to make a down-payment when dealing with a Buy Here Pay Here car lot. However, you’ll have the opportunity to sit down with a financing representative to determine which types of vehicles you can comfortably afford to make payments on each month. And if the monthly payment is doable but your cash reserves are limited, you can always explore other vehicles that require a smaller down payment.
What Documents Do I Need to Obtain Financing at a Buy Here Pay Here Car Lot?
Are you planning to finance your next automobile purchase through a Buy Here Pay Here dealer? The application process for Buy Here Pay Here dealership financing may be a bit more complex than what you’d find at a traditional dealership. So, if you want things to go smoothly when you apply, you will need to gather all the required documentation beforehand.
The Buy Here Pay Here dealership will need the following documents to make a loan decision:
- Current driver’s license: This one is a no-brainer as it is illegal to drive without a license in all 50 states.
- Insurance card: Without the proper coverage, the Buy Here Pay Here dealer won’t let you drive off the lot. Be sure to notify your insurance provider that you plan to purchase a vehicle in the near future. If you don’t have coverage, the Buy Here Pay Here dealer can refer you to a reputable provider.
- Proof of income: The Buy Here Pay Here dealer will need copies of your two most recent pay stubs or a completed employer verification form. If you are self-employed, the Buy Here Pay Here dealer may request bank statements and a copy of last year’s tax return to confirm you can afford to make the payments.
- Proof of residence: A recent bill or statement with your current address, as reflected on your driver’s license, should do the trick.
- Personal references: Be prepared to provide the name, address and telephone number of a few personal references.
- Title or Lien Documents and Registration for Current Vehicle: You’ll only need these documents if you’re planning to trade in your current vehicle. If you still owe on the vehicle, the Buy Here Pay Here dealer will request the lien documents in lieu of the title.
Before you apply, call and inquire about the documentation requirements as it varies by dealer.
How a Buy Here Pay Here Car Lot Works with Credit
Vehicle ownership improves quality of life, giving drivers valuable property ownership and the freedom to get where they want to go without having to rely on public transportation. With many dealerships and traditional lenders, though, low credit scores may hinder purchasing ability. FICO reported that in April 2015, more than 32 percent of Americans had fair credit or worse, with a score of 650 or lower. A poor score of 500 to 599 affected 17 percent of Americans, while nearly 13 percent had bad credit with a score below 500. (1) Many first-time vehicle buyers will not even have any credit history at all.
MarketWatch reports low credit scores are dominant especially for millennials, since they comprise the generation with the lowest credit scores as of August 2015. (2) For those with credit issues who need a vehicle, even those who have experienced bankruptcy in the past, a Buy Here Pay Here dealership provides adaptable solutions compared to traditional lenders because financing is conducted at the lot.
Will Every Buy Here Pay Here Dealer Look at Credit?
Every Buy Here Pay Here car lot differs in its policies regarding credit examination. One dealer may not look at your credit report at all, instead using a steady income as a deciding factor in getting you a car. Another dealer may report your score to credit card bureaus. Don't worry -- this will likely not affect your ability to secure a car purchase, and it can actually help build your credit. Ask the Buy Here Pay Here dealer whether or not they report, so you can monitor your credit as you pay off your financing.
When a Buy Here Pay Here dealership reports your score to a credit bureau, this provides an opportunity for you to secure better loan terms in the future as you make on-time payments to the dealership. Global information services company Experian recommends these tips to improve a credit score: (3)
- Pay bills on time
- Eliminate debt
- Avoid overextending with multiple credit lines or unnecessary costs
A Buy Here Pay Here dealership can assist those with low or poor credit to increase their scores by working to pay off their vehicles according to dealer mandates and by only spending where is required. Purchasing a car from a Buy Here Pay Here car lot can help pave the way toward better credit.
Do Buy Here Pay Here Car Lots Look at Your Credit
When purchasing a vehicle from a Buy Here Pay Here dealership, the most important thing to remember during the process is that honesty is vital. Be transparent and up-front about your financial situation. A Buy Here Pay Here dealer is accustomed to working with a variety of buyers with extreme financial situations and needs. Even if you have poor credit history, a Buy Here Pay Here car lot may provide the vehicle solution you've been searching for.
Make sure you maintain good credit standing after you've made your purchase from a Buy Here Pay Here car lot by working with the dealer to ensure your payments are on time, and lines of communication are always open. Monitor your budget, limit spending in other areas to make sure you can afford your car, and get on your way to creating a better credit history.
3 Tips for Trading In at a Buy Here Pay Here Car Lot.
If you’re in the market for a new vehicle and have an old one to trade in, you have several options for finding the best deal. If you have less than stellar credit you might even consider a Buy Here Pay Here dealership, which has the ability to offer special financing terms and will accept trade-ins in much the same way as any other used car dealership. However, there are a few things you’ll want to know before approaching a Buy Here Pay Here dealer. Here are a few tips and tricks for trading in your vehicle at a Buy Here Pay Here car lot.
Do Your Research
Bad credit can often put you in a weak bargaining position when negotiating on the price of a vehicle. A Buy Here Pay Here dealer may be inclined to start with a higher price or offer less for a trade-in if he or she thinks you’re short on alternatives. You want to be sure you show up at the Buy Here Pay Here dealership with as much information as possible. Know how much you’re vehicle is worth and how much you currently owe on it. If you have some equity in your trade-in, you’ll be able to use it to make a down payment and give yourself some flexibility when it comes time to finance the vehicle through a Buy Here Pay Here dealership.
Keep the Trade-In Negotiation Separate
Don’t let the Buy Here Pay Here dealer try to bundle the negotiation of your trade-in with a negotiation of the new car’s price. This can lead to an old used car deal tactic in which any money you gain on the value of your trade-in is simply tacked onto the price of your new vehicle. Remember that you don’t necessarily have to trade in your old vehicle at the same place you’re buying a new one. Shop around if necessary. This will at least give you some bargaining power at the Buy Here Pay Here dealership.
Timing is Everything
Buy Here Pay Here dealers know that certain vehicles sell better at certain times of the year or under certain conditions. Use this to your advantage to get the best deal. For example, an SUV or truck is more likely to sell during the fall and winter months, while a fuel-efficient vehicle may be more desirable during the summer when gas prices start to peak. If you aren’t in a hurry to buy a new car, then wait for the right time to get the most for your trade-in.
Is a Down Payment Required to Get a Car at a Buy Here Pay Here Car Lot?
Are you looking to purchase your next automobile from a Buy Here Pay Here dealership, but can't afford to make a down payment? You may still be approved for financing, but it may in your best interest to wait until you can afford to bring cash to the table.
Making a Down Payment Lowers Your Total Purchase Price
When you finance your vehicle through the Buy Here Pay Here dealer, you will be responsible for the total asking price of the vehicle, taxes, registration fees and interest. Unfortunately, the interest rates on loans from Buy Here Pay Here dealerships are much higher due to the riskiness of the lender. But the more money you give the Buy Here Pay Here dealer for a down payment, the less you'll pay each month and over the life of the loan.
Uncle Sam Wants His Cut
There’s no way around it; you must pay sales tax on your used vehicle purchase. And Uncle Sam, along with the state tax collectors, want their cut first. But if you don’t make a down payment, the Buy Here Pay Here dealer is on the hook for the taxes owed on the purchase.
How Buy Here Pay Here Dealerships Determine the Amount of the Down Payment
The down payment required by the Buy Here Pay Here car lot depends on the purchase price and financial situation of the buyer. If you have minimal credit history but a decent amount of income, you may only have to make a small down payment of $500 or less. By contrast, the Buy Here Pay Here dealership may require a down payment of $1,000 or more if you can afford the payments, but have a poor credit history.
Some Buy Here Pay Here lots let you drive off the lot without spending a dime. However, making a down payment could save you money over the life of the loan and possibly qualify you for more luxurious vehicle.