Know Before You Go, Auto Loan Financing: Buy Here, Pay Here Dealers

Know Before You Go, Auto Loan Financing: Buy Here, Pay Here Dealers

Posted 6.12.2012 in Articles by Jess

Buying a new car can be exciting and that's why it's important to keep your composure and your head on straight. Car salesmen’s main aim is to make money – bottom line. They may shower you with smiles and little compliments but in the end, money is their goal and they aren't just going to give you a good deal for the heck of it. It may be convenient and fast but be prepared for a big sales push on add-ons and front-loaded loans. Depending on the dealership you go to, there may be enough benefits to go ahead with their auto loan financing rather than elsewhere. There are a few things to know before you go in order to make the right choice for your budget.

Before anything else, it’s important to understand what a “buy here pay here” dealership means. Basically, it’s a dealership where financing means that you arrange a loan and make payments on it at the dealership. The car is essentially purchased through what’s referred to as in-house financing versus through a third party, like a bank. While some BHPH dealerships will accept payment by phone or online, many require that you physically bring a check or cash to their location. Hence, you “buy” the car at the dealership and “pay” on the loan at the dealership.

The difference between a BHPH dealership and a traditional one is actually very little. Many traditional new and used car dealerships have started to offer BHPH financing as an option. The main difference between a strictly BHPH dealership lies in the shopping experience. The dealer will ask you a series of questions, possibly run a credit report and invest in understanding your credit experience before even showing you available cars. Then, depending on your monthly payment range and down payment information factored in, the dealer will show you cars that fit your financial situation.

At a traditional dealership, usually the financial conversation is the last part of your discussion. Once you’ve seen a few models, asked a host of car questions and possibly even test driven one, the dealer will help you explore payment options.

There are a few advantages of going to a BHPH dealership for your next car. First, it gives people with bad credit the opportunity to get much-needed transportation. In many cases, BHPH dealerships aren’t just an option but rather the only option for someone who has continuously been turned down by traditional loan institutions. It also helps to rebuild credit by making timely payments on a BHPH car loan because many dealers will report that positive behavior to the credit reporting agencies. Before you make a final decision, ask the dealership if reporting is a policy they follow. Another advantage is trade-in flexibility. Most BHPH dealerships tend to be more forgiving when it comes to accepting trade-ins on older model cars. That’s because these types of dealerships understand the value and benefit of getting long-term use out of cars that many traditional dealerships would not accept.

As always, before signing any paperwork or making any permanent decisions it’s important to research different dealerships to find the best option for your lifestyle and your budget. If your credit isn’t exactly perfect, maybe it’s time to consider a BHPH dealership. You’ll improve your credit and get the transportation you need. 

 

Image (CC) NanoFame 


 

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