You may have seen ads for “Buy Here, Pay Here,” and you may have wondered what that means. In the simplest terms, Buy Here, Pay Here is a car dealership that funds your vehicle for you, so you don’t have to find a creditor like a bank or credit union. While that may sound troubling, it actually can be a means for improving your credit if you have cash for a down payment. For those times when your credit may be less than good, such a car dealership may actually be a good place to shop so you don’t have to face the loan officer at the bank when they frown at your credit score and stamp “denied” on your application.
There are plenty of BHPH dealerships that actually do want to help people improve credit, be able to purchase a car so they can get to work, and understand how to do good business. A Buy Here, Pay Here dealership with good intentions will state upfront what you need to expect in terms of down payment amounts, how you will pay for your loan, and should be willing to allow you to have the vehicle inspected by your own mechanic before you purchase.
The Low-Down on Down Payments
Whenever you buy a vehicle, even used, the expectation is that you show up with a wad of cash to make a down payment. This is essentially the dealership’s way of ensuring that you have the intention of sticking to your end of the bargain by paying back the loan because you now have skin in the game. If you were to get a loan from an outside lending institution, they require the same up-front payment, which is usually a certain percentage of the vehicle you want to buy. What this does is ensure that the buyer can actually afford the vehicle’s full price since a down payment is typically a fairly big chunk of money. At the very least, a buyer should expect to use their old vehicle as a trade-in, which can serve as the down payment if it’s worth enough.
Going to a Buy Here, Pay Here dealership will be a little different. The down payment is expected just like a big brand dealership, but it may be a lot less than you would pay elsewhere. Buy Here, Pay Here dealerships have the luxury of deciding their own rules about how much is required from the buyer in order to purchase, with some dealerships accepting as little as $100.00 in cash. When you’re in a pinch, and you need a car quickly, this can open a lot of possibilities for folks who really need transportation. And remember, the more you play at the outset, the less your bills will be later. Interest will add up more quickly for a higher loan amount, so the more you can gather to pay upfront, the better off you will be in the future.
Taking advantage of low down payments can be a hold-over when you know you have a large sum of money coming, and you can’t wait until it comes to buy a vehicle. Just remember to make that large payment on the car when the money comes. Either way, you want to stay on top of those loan payments so you can improve your credit. However, one of the best ways to keep your monthly payments low is to put as much money as you can on the vehicle at the start, and if you can ever pay extra on your loan in a month, that will only help you further.
How to Improve Your Credit with Buy Here, Pay Here
Payments that come in on time affect your score positively. Late or missed payments cause the score to go down. Credit cards, mortgages, car loans, and other types of loans from legitimate lenders will all report to credit agencies that keep track of your score. Paying a loan down with timely payments will raise your score over time, which is why you want to be sure the Buy Here, Pay Here dealership financing your vehicle will report your payments to credit agencies. This is a critical question to ask before you sign any paperwork, and it’s a good idea to ask if the dealership will supply this promise in writing before you purchase a vehicle. Once they start reporting your on-time payments, your score should start improving.
Another important factor in this equation is that you know you have enough income to keep paying on the vehicle you buy. Luckily, Buy Here, Pay Here dealerships do an excellent job of making sure you only buy a car you can afford. Many of them will ask to see proof that you meet a certain monthly income threshold, usually around $1,200 a month after taxes, and will tailor their offer around your income and down payment amount. Then, once the financial stuff is done, they’ll only show you cars that fit into your budget. So, making those affordable on-time payments should be easy.
Benefits of Buy Here, Pay Here Dealerships
Sometimes you come across dealerships who really care about their community and want to help people who have run into credit trouble. Lots of people have credit problems, and it’s not always their fault. People get laid off without notice, experience divorce, death in the family, or lose their income in any number of other ways. When it happens, it can be devastating.
Credit agencies don’t act from a place of concern about your circumstances; they just report the numbers. It’s left up to individuals facing hard times to find their own way through their losses. For such times, Buy Here, Pay Here dealerships can actually be a first step in revitalizing a person’s credit so they can get back on their feet.
For one, Buy Here, Pay Here dealerships don’t run your credit, meaning you won’t take hits on your score for being denied. At a traditional dealership, they will usually rapid-fire send out your credit score to several different lenders at once to try and get one who will accept you. While this might not hurt your score much if you have a good score, to begin with, it can do a lot of damage if your score is already low. Buy Here, Pay Here dealerships help you avoid that by not running your credit or only running it once.
The best part about Buy Here, Pay Here dealerships is that they understand what their customers need. Buy Here, Pay Here dealerships stock cars that are safe and mechanically sound, so there are no worries about purchasing a lemon, but they can usually sell these cars at a discounted price because of small surface blemishes. A scratch or a ding doesn’t mean it’s a bad car, and if you can get it for cheap with no credit check, it’s worth it. Plus, you get the added benefit of using this purchase to boost your credit score.
Try a Buy Here, Pay Here Dealership
So, while Buy Here, Pay Here dealerships may seem a little untraditional, they really do provide a unique service to help those who may be struggling due to a low credit score. However, the proof is here. You don’t need to have an outstanding credit score in order to get a safe and reliable vehicle. Just visit your local Buy Here, Pay Here dealership and see what they have to offer you. It just might help you turn your credit score, and your life, around.