When you need a new or used car or truck, you need a new car—but how are you going to pay for it? For most consumers, paying in cash simply isn’t a viable option. That’s why financing options exist—choices that include third-party lenders as banks, credit unions, and lending companies.
Sometimes, though, even those traditional financing sources may turn you down—maybe because you have poor credit, or maybe because you simply don’t have much of a credit history one way or the other. In these cases, Buy Here Pay Here (BHPH) dealerships may be the best and only option. If you’re unfamiliar with this concept, read on for our explanation.
How Does Buy Here Pay Here Work
Essentially, BHPH dealerships offer one-stop shopping, allowing you to buy your car and arrange the financing at the same place. The big advantage here is that you need financing to buy your car, and the dealership really wants to sell you that car—and since the dealership makes the financing decision in-house, approval is all but guaranteed. That’s not to say that everyone will qualify, but if you have an address and a regular paycheck, you should be fine.
That’s the good news—but what’s the downside? Simply this: The dealership knows that you really don’t have any other options. Furthermore, they profit from the loan they offer you, sometimes as much as they do from the vehicle sale itself. As such, you can expect the interest rates to be quite high—usually in the double digits.
Another potential downside is that BHPH dealerships usually prefer you to make pretty frequent payments, every week or two, perhaps. This can be an inconvenience, especially when the dealership requires payment in person. You should always ask about options to pay online or by mail.
Buy Here Pay Here Car Lots Near Me
Something else you should know is that the line between traditional and BHPH lots grows a little blurrier every day. You may not always see the letters BHPH emblazoned on the dealership sign, but it could be essentially the same thing; usually, any dealership that advertises itself with language like “We Finance” is, for all intents and purposes, BHPH.
What we recommend, ultimately, is that you try traditional avenues of financing first—the credit union or the bank. Don’t give up if the first one doesn’t approve your application, as different lenders will have different standards. If you don’t have any luck, try a franchised dealership—something like a Chevrolet—where they offer “easy financing” or “rebuilding credit.”
If all else fails, BHPH can certainly be a viable way to get an automobile, even if you’ll end up paying a little more than you might like for it. BHPH dealerships are not ideal, but they do serve a real purpose, so keep them in mind, and use them if you need to.
To learn more about car buying and financing, keep following along with us here at the Get My Auto blog, devoted to all things automotive.