What About Buy Here Pay Here?
The buy here pay here option started in the 1970’s when the savings and loan organizations were having problems. These locations offered car buyers an opportunity to be able to purchase an automobile without having to find a financial institution that was able or willing to make the loan. This could be an option if you are self employed and can not prove your income.
Today, the buy here pay here option for buying a car is mainly beneficial to the person 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 but has never bought anything on credit before. An example of poor credit might be a person 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. Neither of these situations is any fault of the borrower, and in both cases the individual still needs reliable transportation.
Buy Here Pay Here Dealers
Buy Here Pay Here Lots and No Credit Check Dealers 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 subprime credit, and you need an auto loan with no credit history do not just assume that Buy Here Pay Here lots are your only option. First-time auto loans with no cosigner and buyers with bad credit and no cosigner have other avenues. Standard finance companies that work with new car dealerships offer special programs for consumers attempting to rebuild their credit.
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, so they do not have to run credit checks to offer you a loan. However, many car lots offering in-house financing create special finance companies just for their businesses. You may be required to make your payments in person. Some in-house financiers offer online payment systems and other options, such as automatic debit payments.
There are also some new car dealers that have buy here pay here options for their used car selections. Most times these cars have previously 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.
Buy Here Pay Here Advantages
There are many advantages of purchasing a vehicle from a buy here pay here dealer with no credit check that differ from a dealer that offers a no credit check loan.
- One is, it gives an individual the opportunity to build or repair their credit history, but only if that dealer reports your car loan to improve your credit history. For the first auto loan for that young person just starting out that has no credit history, it gives them 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 of 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 give you a lower monthly payment.
- A third advantage is that many times the dealer will sell and finance the car and 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 gotten your credit rating up you may be able to qualify for auto refinancing for lower payments.
Buy Here Pay Here Disadvantages
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. If you purchase your car from a Buy Here Pay Here lot or a dealer who offers no credit check loans, you will not be helping to rebuild your credit. Your good payment history is usually not reported to the credit bureaus.
Many of these lots also carry out security measures to guard against people 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 amount in question squared away.
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 automobile over the full term of the loan than they would with a conventional loan.
Another disadvantage is that the used car dealer may take older cars in as a trade that a traditional auto dealer would not consider taking and then selling them to people that have bad credit and can’t get a car loan.
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 the cars are only cleaned up, and the engine and drive train are not thoroughly inspected and repaired. This puts you at a definite risk of buying bad quality cars. Many of the security measures make it possible for them to offer a car loan without checking a persons credit history.