Buy Here Pay Here vs. New Car Dealers – Valley’s Blog

Buy Here Pay Here vs. New Car Dealers

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You have probably seen used car dealerships with signs like “We Finance” or “Buy Here Pay Here“. These dealerships offer in-house financing, generally to consumers with poor credit or no credit history. However, many people are unaware that new car dealerships also offer credit options to consumers with less than perfect credit to finance vehicles on their used car lots.

BHPH Lots vs. New Car Dealerships

Car LotsBuy Here Pay Here Lots are an option for those who cannot get bank financing or a traditional auto loan from a standard finance company. For example, consumers with a recent bankruptcy on their credit reports may find that Buy Here Pay Here lots are their only option for obtaining transportation. However, if you have bad credit, don’t just assume that Buy Here Pay Here lots are your only option. Standard finance companies that work with new car dealerships offer special programs for consumers attempting to rebuild their credit.

– In-house Financing

With Buy Here Pay Here dealerships, the dealership carries the loan on the car. This means that you make payments directly to the dealership, and not to a major finance company or bank. However, many car lots offering in-house financing create special finance companies just for their own businesses. You may be required to make your payments in person, however, some in-house financiers offer online payment systems and other options, such as automatic debit payments.

– Security Measures

Many of these lots also implement security measures to guard against individuals who may “skip” with the car. For example, Buy Here Pay Here lots often install a remote control device that they can use as a GPS tracker to find the car. They can also disable the car’s ignition from a remote location. If you are late on a payment, you may find yourself walking to work or taking the bus until you can get the payment in question squared away.

– Car Selection

When you visit a Buy Here Pay Here lot to pick out your new vehicle, first you must talk to the finance manager. He or she will assist you in determining how much you can spend for your down-payment, as well as for your scheduled payments. Only after the finance manager has evaluated your credit situation are you able to select a car. Sometimes, you are offered only one or two options.

– Payments

Buy Here Pay Here lots may require weekly or bi-weekly payments, and generally the finance charge is quite high for the loans they fund. The Buy Here Pay Here lot may be the only option for those who have recently suffered a major financial setback. However, before settling for a last-chance loan, make sure that this is your only viable option.

– Build Your Credit

When you obtain financing for a large purchase, such as a vehicle, you probably try to make the regular payments on time and in full to build your credit rating. However, if you purchase your car from a Buy Here Pay Here lot, your good payment history is usually not reported to the credit bureaus.

New Car Dealerships and Traditional Loan Options

Most, if not all new car dealerships offer used cars in addition to their new vehicles. These lots take used trade-ins for new models, and usually sell the older vehicles from a back lot or a satellite location. New car dealerships also offer credit options for those with less than perfect credit. Generally, if your credit score is 640 or above, you can probably qualify for a traditional loan with a standard finance company. You should definitely explore traditional loan options before purchasing a vehicle from a Buy Here Pay Here lot.

Advantages of a Traditional Loan

– Payment Options

When you obtain a traditional loan, you will likely have the option of making your payments online, through the mail or even over the phone. You may also have the option of setting up automatic debit payments, if the finance company offers the service.

– Build Your Credit

When you acquire a traditional loan, your payment history is reported to one or more of the three major credit reporting agencies. As you make your regular and on-time payments, your credit rating improves over time. Paying off the vehicle gives your credit rating a big boost. Explore traditional financing options before settling for a We Finance establishment.

– Tracking Devices

You probably will not have a tracking device installed in the car in case you miss a payment. However, the vehicle can and will be repossessed if you stop making the payments. Finance companies hire skip tracers and recovery specialists to locate and recover vehicles from owners who are severely delinquent.

– Car Selection

One of the greatest benefits of obtaining a loan through a lender is the fact that you get to pick out your own vehicle! In fact, you can shop around for your car before you even apply for your loan. Locate the car you want, and then apply for a loan online at Valley Auto Loans. We specialize in matching consumers with less than perfect credit with lenders who offer them excellent financing options.

If your income allows, you can even qualify for a new car with imperfect credit. Lenders who specialize in loans for those attempting to build their credit are available and ready to be matched with you.

– Bankruptcies

If you have recently filed for bankruptcy, you may still be able to qualify for a car loan. Note that when consumers file for bankruptcy, their credit scores often sink to the 500 range. Before applying for financing, work on building your credit rating to a score of 640 or higher. You can do this by obtaining a secured credit card and making regular payments. Pay more than the minimum balance, and keep your balance paid down. Be sure to pay all other bills reported to the credit bureaus on time an in full. Within six months to a year after filing for bankruptcy, you can likely qualify for a car loan.

Note that you must obtain the permission of the court to incur additional debt if you have filed Chapter 13. Consult with your bankruptcy attorney to determine how best to proceed for your case.

– Down-Payment

The higher the down-payment you can put down on your car purchase, the lower your car note will be. This means that your payments will be lower, and the terms of the loan will be shorter than with a smaller down-payment. Save up a healthy down-payment before applying for the loan, if possible. However, even with a small down-payment, you may be able to obtain a traditional auto loan.

Valley Auto Loans

Whether you seek to finance a new car or a used car, Valley Auto Loans can find the right loan for you. We specialize in matching consumers with less than perfect credit with lenders who offer special credit-building programs. Complete our quick online application and let us find a lender for you today. Don’t settle for a car you don’t really want from a We Finance establishment when you can get the car you want with a loan that works for you.