Welcome to the Buy Here Pay Here Car Lots site! Buy here pay here auto sales is currently the fastest growing segments in bad credit car sales. If you are thinking about this, you can find articles on this site explaining how Buy Here Pay Here Car Lots Work and what you can expect. The Buy Here Pay Here Programs FAQs section contains answers to the most frequently asked questions about these lots.
How Do Buy Here Pay Here Car Lots Work?
Buy here pay here car lots provide used cars to customers with no credit or poor credit. Some are traditional car dealerships that offer buy here pay here (BHPH) subprime car financing as part of their services, while others are special car lots with dedicated buy here pay here only inventories. These car lots offer in house auto financing for the cars sold. Customers purchase cheap used cars and make their car payments directly to these buy here pay here car dealerships, rather than an outside party.
A lot of buy here pay here car lots are smaller local dealerships, or a special department within car lots that arranges for bad credit in house loans. However, there are larger multi-state chains that specialize only in serving buy here pay here customers. The biggest one is Car Mart, which has over a 100 locations in states like Arkansas, Alabama, Indiana and Texas.
Why Do People Purchase Buy Here Pay Here Used Cars?
People who purchase a car from buy here pay here car lots usually have problems with their credit. It is sometimes known as a bad credit car loans of last resort. It may be the only way someone may be able to drive off with a car with limited cash and credit. It’s used as a last resort since the terms are harsher than if you qualify for a regular car loan.
Not all car buyers at these lots are in the low income strata either. There are buyers who have a good income but have become just so strapped for credit that they cannot find another place that will let them drive a car off with the limited cash they can spend.
What Are The Transactions Like At Buy Here Pay Here Car Lots?
When you step into a buy here pay here car lot, the salepeople will focus on a discussion about your credit. Unlike the traditional car purchase experience at dealerships, the credit check is usually made prior to discussions on the car models available. Until the dealership has a clear idea about your financial situation, you probably will not get very far with the car shopping.
Sometimes, you can access the websites of BHPH dealers and have the credit check approval done online, ahead of your visit. You could also have this done by phone. In preparing for a visit to a BHPH car lot, you probably want to have your documents such as drivers license, social security number, pay stubs, bank statements, references with phone numbers and other related financial documentation ready. It is also a good idea to call ahead of your visit to ascertain what type of documentation is needed. This will speed up the process in getting the car purchase through.
BHPH car lots are often willing to accept low down payments, usually ranging from $1000 to $2000. There will be weekly payments of $50 and up, or payments of $100 plus every two weeks. The low cash outlay and payments is what attracts many to these car lots. You can drive off with a cheap used car for under $1000 in cash. However, these payments stretch out for quite a few years, so your total outlay for the car will be higher than if you go for a regular car loan.
BHPH Car Lot Inventories
The cars offered at these car lots, or for BHPH purchases at more traditional lots, are often older with a lot of mileage already chalked up. Typically, you find cars that have been driven 70,000 to 100,000 miles or more, and 7 – 10 years and older. A look at buy here pay here inventories in various lots found models from makers like Toyota, Mitsubishi, Chevrolet, Chrysler, Dodge, Nissan, Ford, Mazda, BMW, Mercedez Benz and so on. There are trucks, sedans and sport utility vehicles.
Cost Of Car Ownership
Although the downpayment and installment cash spent for achieving car ownership through a BHPH car lot is cheap when you see them individually, it gets expensive once you add them all up. You end up paying quite a bit (think 40% to 80%) over what the Kelley’s blue book value of the car happen to be.
These contracts often involve high interest rates, in the realm of 15% to 25%, much higher than what you would normally pay for a car loan. However, if you have been turned down for loans at other car lots, even poor credit second chance car loans, it is sometimes the only option you have left.
When getting a BHPH deal, make sure to understand the payment policies. Many pay here buy here car lots require that you bring in a cash payment physically directly to the dealer. Some dealers are starting to offer options for online and phone payments. If you need you bring in cash payments every one or two weeks, you need to make sure that the car lot is local to you, within a reasonable distance.
Credit Rebuilding Program Through BHPH Dealerships
One benefit of buy here pay here car loans is that it could help to rebuild your credit. A lot of dealers will report your timely car payments to the main consumer credit agencies. Consistent payments on an installment loan is one of the factors that will increase credit scores. So along with gaining car ownership, you can also build up your credit history at the same time. Some car lots will also advertise their buy here pay here programs as credit rebuilding auto sales programs.
On-Time Car Payments Or Risk Repossession
Making regular payments for your cars is of paramount importance. The policies for repossession with buy here pay here used cars can be very strict. Make sure you find out ahead of time if there is any grace period offered. Some dealers have a zero tolerance policy, where cars that are 5 days late in their payments get repossessed. It is not unheard of that people ran into financial emergencies and could not react fast enough, so their cars got repossessed.
Since 25% of buy here pay here car loans end in default, the car dealers are extremely vigilant and shrewd when they detect any sign that their customers will not be paying up on their obligations. Some car dealers are also known to install hidden tracking devices inside the sold cars, making it easier for them to locate the car for repossession. Others put in remote control ignition switches, turning the car off from any further driving until the payments are made.
Reliability Of Buy Here Pay Here Used Cars
Most of the buy here pay here automobiles sold are older vehicles that have lots of miles on them. That said, you should still find one that is reliable to drive. It is also in the dealer’s interest to provide you with a good vehicle, so that you will be a happy customer who never misses a payment. Before you purchase the car, make sure to verify with the dealer on their reconditioning process, and whether they have fully inspected the car. Inquire about the guarantees they provide for the car.
If you have a mechanic that you trust, try to arrange for the car to be inspected before you buy it. This may be another additional expense upfront, but well worth it in case you get stuck with a lemon that you have over-paid for. Some dealers will offer a warranty on the car as well, and will provide onsite repair and maintenance. This is always a good sign.