What to Know Before Shopping at a Buy Here Pay Here Dealership

What to Know Before Shopping at a Buy Here Pay Here Dealership

If you’ve ever had trouble securing a loan to buy a car, you might have come across a buy here pay here car dealership. These dealerships offer in-house financing, most often to car buyers with bad credit. While this is an option if you need to get a car and can’t get a loan, there are some things you’ll want to consider before signing on the dotted line.

What Exactly is A Buy Here, Pay Here Dealer?

When you shop at a traditional car dealership and sign a contract to buy a car, the contract is typically passed on to an auto lender. The lender provides the loan in order for you to purchase the car. When you buy from a buy here pay here dealer, the dealer provides the financing for the cars it has on its lot. This means that they will work with you regardless of your credit score, and a credit check may not even be involved in the process.

Instead of a credit check, these dealerships will ask for proof that you can afford the monthly payment. As long as you have the required paperwork, the car-buying process is relatively quick and easy.

It Can Be Expensive

Buy here pay here dealers specialize in working with buyers who have no credit or bad credit, but it comes at a cost. These dealers will not cut you any slack when it comes to interest rates. The rates can get up to 20% and even higher.

It’s also common for buy here pay here dealers to add additional fees to the contract. The high interest rates and added fees mean you’ll most likely end up paying more for your car over the long term.

Do Your Research on Buy Here Pay Here Dealers

One of the most important things to know before shopping at a buy here pay here dealership is you need to do your research. Make sure you understand all of the conditions and the terms of the contract before you sign it. By taking this necessary step, you can avoid getting into a bad situation with a lender that has a less-than-stellar reputation.

The Other Downside

If you want to build your credit back, this type of loan may not help. Since the dealership doesn’t do a credit check before offering you the loan, they don’t report your monthly payments to the credit bureaus. This means you can’t use the loan to rebuild or even establish a credit history.

There Are Some Advantages to Buy Here Pay Here

The most obvious advantage of shopping and buying a car through one of these dealerships is that you can get a car even if you have bad credit. If you’ve been turned down by traditional lenders when you apply for a loan and you need a vehicle, it’s one of the options to consider. Make sure to look at all the terms of the loan before making a decision. There are lenders out there that specifically work with people with bad credit, but their interest rates might be even higher than the rates offered by a buy here pay here dealership.


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