Buy here, pay here dealerships can be intimidating. High-interest rates, due to bad credit, a selection of only used cars, and a whole new way of buying a car might put you off from the experience entirely. But, it doesn’t have to be that way. If you follow these five tips, not only will it make getting a car from a buy here, pay here dealership easier, it will also make it less stressful.
Which is what everyone — dealerships and consumers — both want for a car-buying experience. After all, the less stressed you are, the easier it makes their job. The easier their job, the more efficient they can be. It all comes full circle in the end.
Learn the Car’s Origin
I’m not saying all buy here, pay here dealerships are untrustworthy. Nor am I saying all of them are trustworthy. But just like any used car purchase, you’ll want to learn the origin of the car before purchasing it. The shopping process might be done differently, but there is nothing against looking at a CarFax report to learn about any mechanical trouble the car has experienced, or accidents it might have encountered.
Therefore, you’ll want to make sure you check that out. If the dealership refuses to show you a vehicle history or CarFax report, then walk away and look for one that will.
Get it Inspected Independently
Same goes for an independent mechanic inspecting your prospective purchase – if the dealership won’t let you test drive the vehicle so you can see firsthand that the vehicle is in good condition, then don’t buy it. Chances are, the dealership is trying to hide something.
Hey, it’s not just buy here, pay here dealerships that would do this. There are plenty of unscrupulous used car lots out there as well.
Short Term Financing is Key
Although it will be hard to negotiate terms because of your poor credit, still shoot for short term financing. That doesn’t mean a smaller amount with increased frequency of payments — you’ll already be paying bi-weekly, most likely — but I mean short-term financing of a relative low bi-weekly payment over the course of 32 months instead of 64. That way, you keep the interest rate down and save yourself some money.
Pay A Larger Downpayment in Cash
One of the best ways to reduce your payments? Simple! Pay a larger down payment in cash first. Just like “standard” car buying, the more you pay upfront, the more you reduce the overall loan term. Aim for at least 20%, and if the BHPH dealer requests more than that, consider it a good thing. Just make sure to negotiate short term financing if you are paying more than average on a down payment. This way, you’ll know for a fact the down payment actually put a dent in the overall price of the car.
Get What You Need – Not Want
Finally, get what you need — not what you want. If your budget is $14,000 and you find a used car that works for $7,000, then buy that one. Don’t get one that’s more expensive simply because it has heated seats or leather upholstery. Take that chunk of change you saved and put a big down payment on the cheaper car, and put the rest in the bank to help with repairs or get a jump start on paying off your loan.
Eventually, your credit score will go up if you’re good with making the bi-weekly payments in cash (which is how most BHPH dealers take payments). Then, you can refinance the loan, pay that car off quicker, and upgrade to a new one.