Are you wondering how Buy Here Pay Here Finance options work?
If you are looking to buy another pre-owned car but are having a hard time getting approved for financing you may want to consider trying out one of the buy here pay here car lots in your area.
At these type of car dealerships, you do not have to worry about your credit history. They will be happy to work with you. As long as your monthly payments are on time you can have any vehicle on their lot. You can even apply online for the vehicle you want and they will send you a text message letting you know if it is available if they will finance you personally to buy the car, truck or SUV you are interested in.
For some detailed information on how exactly the buy here pay here finance option works for people with bad credit, try and stake some time and watch the following video:
How Buy Here Pay Here Dealerships Auto Financing Works
As some people are still having a bad economic time these days, more people are feeling that saving money and getting interested in buying used cars rather than buying new cars is a better option. One of the options is to use buy here pay here car lots as they don’t use the traditional method of going through a bank to do customers financing.
Numerous individuals that have been denied vehicle credit or turned down at ordinary vehicle dealers, feel that the only way they will be able to obtain financing is by using a buy here pay here car lot. This is not the best alternative for you if you have bad credit. Let’s take a look at how to buy here pay here car dealers work.
The Sale Price
Buy here pay here car lots work by charging more money for cars than normal car dealerships do. Typically they sell cars that other car lots can only be able to release to an auction. Most new car dealers do not have lenders that will finance a vehicle that has over 75,000 miles on them.
As there are not any new car dealerships that are competing to buy these types of cars that have high mileage an auction, buy here pay here car lots can pick up these vehicles very cheap. As buy here pay here car lots finance their own cars, there is not a lender or a loan company that is overseeing the amount of money that is being charged for the vehicle.
As many people that use these types of car lots are buying their vehicles based upon payments, rather than price along with having the desperation of needing to get a car, buy here pay here dealers can get away with charging above retail price for a vehicle. In simple terms, you will pay more for a vehicle at a buy here pay here car lot then you will at a normal dealership or through a private seller.
Each state has its own laws and regulations regarding how much interest that a pawn shop or a buy here pay here car lot can charge. In many states, the cap on interest rates is 29% interest. On average, you can generally expect to pay over 20% interest at a buy here pay here car lot. Unfortunately, many people do not know that there are other ways to obtain financing when you have very bad credit.
Generally speaking, from years of experience of having been in the car business myself, buy here pay your car dealerships will try to get you to put down a down payment that is nearer what the dealer actually paid for the car.
In other words, what you put down for a down payment covers the majority of the cost of the car for the dealer. Then, what you pay in payments and interest charges is primarily profit. This reduces the risk that the buy here pay here dealer has in financing a car to someone that has really bad credit.
What Are Buy Here Pay Here Car Lots
This refers to car lots that give their own financing choices to car buyers who can’t get a loan due to financial reason or bad credit. The buyers deal with the car dealerships directly they won’t necessarily go to a bank or financing company.
This way, car buyers can have a better chance of negotiating the car payments on their schedule as the dealerships will offer various financing programs and they will make the buyers pay what they can afford. But at the same time, this also means the dealerships can choose customers who might have been already denied from the bank for finance offers.
It sounds like a good option for the car buyers, but one downside is that car buyers will be paying a higher interest rate as they are considered a risk to buy here pay here car dealers. Your entire payment may take longer than normal financial programs. Another drawback is that purchasers are constrained to the choices of vehicles when they need to pick, as they are just permitted a loan for what they are affording.
In the meanwhile, the upside of the buy here pay here lots is that the dealership will listen to your situation and can specifically offer what you can afford based on your current financial ability. Another advantage is that most dealerships won’t ask a down payment which is very appealing facts to car buyers with a bad credit score.
A Better Alternative
Many people that have really bad credit and have been turned down by normal car dealerships don’t think that they are good enough or have good enough credit to be able to get a real car loan.
This is why people turn to buy here pay here car lots and end up spending more money than they have to. You can get more car for less money if you simply know what to do. The problem is that many people have no idea that there are better alternatives available to them.
Even if you have horrible credit, it is very easy to apply and to get approved for a car loan through a couple of good sources on the Internet. Just like everything else, you can do just about everything on the Internet.
A new car dealership is not going to tell you to run home and get on your computer to find out what the invoice cost for their car is. Neither will, a buy here car lot tell you that you can get on the Internet and get a better deal on your financing. That makes sense, doesn’t it?
All businesses want to protect their profits and if customers are in the dark and don’t know that there are other alternative options for them, then they can make more money.
Buy Here Pay Here Trade-Ins
BHPH lots do take trade-ins. However, they won’t take it as just a down payment. Oftentimes they will give you better trade-in value because you are dealing directly with them. It’s way more hands on.
A lot of BHPH lots are smaller and need the extra customer base and extra money from your trade-in to earn your business. Having an automobile to trade-in can really help you go a long way toward getting the vehicle you want.
Steps to take to Find the Best Buy Here Pay Here Car Lots near you
Since there aren’t any third-party lenders involved in the approval process it makes getting the car loan easier, but it also has conditions that may seem unfair or unconventional if you have never done business with a buy here pay here car dealer. Here are steps to Consider Before Choosing a Buy Here Pay Here car lots.
Make sure you are aware of the way that payments are expected to be made. Some BHPH car dealers require that payments are to be made in person weekly where the car was purchased and in cash. While others accept checks or electronic payments as long as they are paid on time. Whatever the conditions dictate you should make sure they are workable for your situation and that the location of the dealer is convenient.
The last thing you want to think about is being late with your car payment, but you need to be aware of the consequences if there is some reason that you would be late with your payment. There may be late charges, immediate termination or repossession of the contract. So you need to know the expectation before you choose a car lot.
Breakdowns and Repairs
What happens if your vehicle breaks down and needs expensive car repairs in a week, month or year?
Some BHPH car dealers include a warranty with your vehicle purchase, but it usually includes conditions and you should be aware of these conditions. Sometimes you will be responsible for a deductible payment or if there is not a warranty you will have to pay for all repairs. If you are purchasing a buy here pay here car money can be tight and very difficult for you to pay for repairs and make your payment.
Typically the dealership will assess your financial condition and ability to repay the auto loan and let you select a car accordingly from what they have in their inventory. What if you don’t like any of the cars they have? Some Buy Here Pay Here car dealers have more than one location or they can get a car for you depending on creditworthiness or amount of down payment. This is something you will want to know before you select a BHPH car dealer.
You need to weigh the pros, cons and ask as many questions about what type of financial commitment you’re getting into. Its when you don’t ask questions and ignore the fine print that things go wrong. Its this type of attitude that will get you in the car that you don’t want with payments you can’t afford.
Don’t let a salesman pressure you into a contract where you are destined to fail. Making poor financial decisions is what got you into this situation in the first place it’s time to start making the right decision.
If you want to save money and avoid the overpriced cars and outrages finance charges that are charged by a buy here pay here car lots, you can easily work out a deal with an online lender that will provide you with a car loan, even with disasters on your credit report. It is much easier than you think.
For more information on how to find new and used car dealerships and learn about the finance options that they offer, be sure to take some time and read the following related article.