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Buy Here Pay Here Myths Debunked

Buy Here Pay Here dealerships have long been in existence and for about as long, there have been a wide variety of misconceptions and myths surrounding it.  

While some myths have truth in their origins, the vast majority are antiquated misconceptions that have been past down generations.  

The unfortunate truth is that while the stories haven’t changed, the automotive industry has.  Due to a much larger and still growing market shrouded in government regulations, the Cincinnati Buy Here Pay Here industry has also had to change.    

So, how do you change the mind of people who’ve believed these myths for so long?  It does take time, but the correct information is available.  As it can be said about so many things in life, the truth is the best place to start.  

Business is Business

First off, let’s remember that Buy Here Pay Here dealerships are legitimate, government regulated businesses.  As with every single business out there, they are in it to make a profit, otherwise, they wouldn’t exist.  

Secondly, this industry succeeds because people need it.  If there was no demand or market for Buy Here Pay Here dealerships, people wouldn’t come, the dealerships would close and the industry would become obsolete.  

Because of today’s standards and growing markets, competition does exists.  Luckily for every consumer out there, you have options.  

Should the experience you have at one place turn you off, you always have the option to leave and go somewhere else.  This makes competition fierce, but keeps the playing field fair.  

Do Your Research

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This industry is driven (ha!) by the fact that you need a car.  Because options are available to you, you can choose which dealership you want to bring your business.  

True, options may be a bit limited, but they exist, nonetheless.  Like with any big financial decision you make, information is key, so do your research.  

Should you find rates too high at one Buy Here Pay Here lot, find another and see what their rates are.  Learn where the other dealerships are and gain knowledge about their offers and rates.   

Okay, let’s start debunking some myths.  

“Over the Top Interest Rates”

This is a big concern, as it should be, and probably the biggest scare tactic out there.  Most people have heard some rates are as high as 30%.  Indeed, that is a very high rate.  Can some places charge that?  Maybe.  Is that common?  No and here’s why.  

It is important to remember that Buy Here Pay Here is a state regulated industry so interest rate caps are determined by the state government.  Some states do allow interest rates to get that high, but would you bring your business to a dealership where that was your rate?  

No, of course not.  So it doesn’t behoove the dealership to charge such high rates when you can go to their competitor and get better rates.  

As a general rule, most states put an interest rate cap between 17-20%.  This is still high, but be aware this is a high risk transaction so a lower interest rate will be very difficult, if not impossible, to find.  

“Large Down Payments”

Unfortunately, this is one of those myths that used to be true but isn’t any longer and is now just antiquated.  Decades ago when the average prices of cars were much lower and the auto

industry didn’t exist like it does today, Buy Here Pay Here dealerships used to make the down payment the wholesale cost or what the dealer paid.  While this was a shoddy move, it did guarantee that the dealer was getting their money’s worth.  

The truth is this simply couldn’t happen in today’s market.  Car prices are so much higher these days that no one would be able to afford a down payment that large and business wouldn’t exist.  

However, down payments do have to exists, as there needs to be some insurance on payments and proof of responsibility, so most Buy Here Pay Here dealerships are willing to work with the buyer regarding payments.  

If you can’t find a dealership that is willing to work with you, find a different dealer.  

“Unregulated Industry”  

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For whatever reason, Buy Here Pay Here dealerships pop into people’s minds like the unregulated wild west.  However ‘free’ of regulation this industry used to be, it is not like that today.  

The only proof one needs of this is to look at the automotive industry.  Strict government regulations are in place to protect consumers exist at every level.  These regulations exist to ensure that the buyer isn’t going to be scammed or taken for the proverbial “ride”.  

To put your nerves at ease, here is a list of some of the rules and acts that must be followed by law:

The Fair & Accurate Credit Transaction Act, The Safeguards Rule, The Disposal Rule, The Fair Debt Collections Practices Act, State & Federal Unfair & Deceptive Practices Laws, The Red Flags Rule, The Rise Based Pricing Rule, State Usury Laws, The Truth In Lending Act, The Used Car Rule and The Privacy Rule.  

Phew.  That’s eleven laws, rules and acts that if not followed to the tooth, the government can fine, penalize and/or take that business away.  

Doesn’t appear to be so ‘unregulated’ now, does it?

“Repossess Cars and Charge a Ton of Fees”  

Any financial institution that loans money out to lenders has a legal right to either their money or possessions.  This does mean that if payments are not being made, or by signed contract, they have the ability to repossess your car.  

When you sign a contract, which you will when you set up payments, you want to look for the repercussions in writing.  Don’t take someone’s ‘word’ for it.  If you sign a paper that is a legal document, you are responsible for knowing exactly what was on that document.  

While this idea may seem a bit daunting, any financial institution is going to have the same if not similar repercussions.  The take-away here is: make your payments on time or be honest with your lender about your financial situation.  

They do want to keep you as a customer and will be more willing to accommodate you if you are upfront with them.  It makes more financial sense for them to help you get back on your feet and keep you as a life-long customer than to watch you faultar.  

“Turn and Burn Car” 

This is the idea that Buy Here Pay Here dealerships will keep repossessing a car to then use over time and time again on different customers.  Again, antiquated in thought, but there is possibly some truth in its origin.  

However it may have happened, once upon a time, it simply is no longer so and for a good reason:  turning and burning cars makes no financial sense.  Because of high wholesale costs, expenses in fixing the cars and strict government regulations the possibility of this being practical, let alone profitable isn’t a reality.  

It is wise to remember a couple positive things about Buy Here Pay Here dealerships:

  1. Buy Here Pay Here dealerships want you to succeed as much as you do.  A returning satisfied customer is far more profitable to them than not.  
  2. This industry is heavily regulated by state and federal government.  There are fines, fees and penalties for dealers if they do not follow the law.
  3. Do your research and stay positive about this process and it will be a positive experience for you.  

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