Is buy here pay here for you?
There are several buy here pay here options that are offered by car dealers to individuals who have bad credit and need to finance a car. Sometimes this seems easier than applying for a auto loan because you don’t think you will qualify when you have bad credit.
One of those options is getting a car from a dealer you make payments to directly, one who will offer an in-house auto loan. This type of dealer is one that is willing to let you make the payments for the amount of the sale directly to the dealership instead of being required to qualify for a loan from another traditional source such as a bank or a credit union. In summary, the car dealer simply finances the car for you.
Who Is Buy Here Pay Here For?
The buy here pay here option was started in the 1970’s when the savings and loan organizations were having problems. These locations offered car buyers the option of being able to purchase an automobile without having to find a financial institution that was able or willing to make the loan.
Today, the buy here pay here option to purchasing a car is mainly beneficial to the individual that either has not built up any credit history, or for the consumer that has a poor credit history. An example of an individual that has no credit history would be a young person such as a recent high school graduate who needs a car to be able to commute to their new job. An example of poor credit might be an individual who has run into financial hardship due to high medical bills and has fallen behind on his or her other bills over an extended period of time. Neither of these situations is any fault of the borrower, and in both situations the individual still needs reliable transportation.
Types Of Dealers That Offer Buy Here Pay Here
Generally speaking, used car dealers that offer in-house financing obtain their inventory from attending car auctions. Many of the cars available are reliable and dependable, but often times the cars are only cleaned up and the engine and drive train are not thoroughly inspected and repaired. This puts you at considerable risk of buying poor quality cars.
There are also some new car dealers that have buy here pay here options for their used car selections. Most times these cars are ones that have been traded in for a newer model and the dealer has inspected the cars and has performed any maintenance that was found to be needed. The car may have also been purchased new from that dealer and maintained by them, in which case the full maintenance record on that car would be available to indicate the current condition of the car.
Advantages Of BHPH
There are many advantages of purchasing a vehicle from a buy here pay here dealer. One is it gives an individual the opportunity to build or repair their credit history. For you first auto loan for that young person just starting out that has no credit history, it gives him or her the chance to build that credit history. For the person that has been hit with a life altering experience, it could help them build their credit score back up.
A second advantage to this option is that usually the loan repayment terms are structured differently than a traditional loan. For example, the length of the loan could be longer which could result in a lower monthly payment.
A third advantage is that many times the dealer will sell and finance the car without the requirement of a credit report. They may only require the proof that the buyer brings home a certain amount of pay each week from a job, and that is all that would be needed to qualify.
Another advantage is that this may be the only option for you at this time if you have no credit history, to get a vehicle for your transportation needs. After you have made some payments and get your credit rating up you may be able to qualify for auto refinancing for lower payments.
Disadvantages Of BHPH
There are also some disadvantages of purchasing a vehicle from a buy here pay here dealer. First is the interest rate that they will charge. Because they are taking a greater risk in financing the vehicle, they will usually charge a higher rate than the traditional lenders will charge. Because of this, the buyer will pay more for the vehicle over the full term of the loan than they would with a traditional loan.
The second disadvantage is that many times the dealer will install a security device such as a GPS or an ignition kill switch, or both, on the vehicle that will enable them to track it or disable it if the payment is not made on time. This is done for their security, but if the buyer is unexpectedly entered into the hospital and cannot make the payment on time, then when they are released for the hospital, the car will not start until after the payment is made.
A third disadvantage is that the used car dealer may take an old car in as a trade that a traditional auto dealer would not consider taking.
A fourth disadvantage is that many dealers require that the buyer personally bring the payment into the office on or before the day that it is due. This means that if the payments are to be made weekly, the buyer will have to go to the dealer every week to make the payment. If the dealer is not close to the buyers regular traveling routes, this requirement will add some additional hardship on the buyer.
Requirements To Purchase At BHPH
Most of the time, the things that the dealer will require from the buyer to be able to qualify for the purchase are very few. First, expect the dealer to require you to possess a valid driver’s license. If you do not have one they will not even consider going forward with the sale of a car. They will also require some proof of income, such as a recent pay stub. They may also require a minimum weekly take home amount from that source of income. They will usually require proof of residence, and probably will not accept a P.O. box. They will require it to be a physical residential street address. Once the sale has been made they will also require the sufficient amount of insurance that would cover the cost of the car if it is involved in a wreck.
Should You Purchase From BHPH Dealer?
We would recommend that you do your research before you make this decision. Don’t just assume that you can’t get a traditional loan. We would recommend that you apply for a loan first and then you could be approved. If you find out that you are not approved after you have applied, then maybe a buy here pay here loan is the only option for you.
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