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What’s Buy Here Pay Here?

How do you avoid the headache of financing a new car? This is the challenge many potential car owners face. Paying for a car, whether it’s through financing, a lease, or upfront cash is never an easy task. Just researching and selecting the best option for you can cause quite the headache. If you have a poor credit score or troubled financial history, this can make matters worse.

People with poor financial performance, including failing to pay bills on time or racking up too much credit at once, face limited options when it comes to purchasing a new vehicle. What’s worse, they often have to search all around for a bank that is willing even to entertain the notion of giving them a car loan. Unfortunately, most banks and credit unions aren’t likely to work with these individuals because of the greater risk. This means the chance of buying a new vehicle is almost nonexistent.

Thankfully, a new trend in automotive dealerships has become popular in recent years. The concept of Buy Here Pay Here in not only makes it more convenient to afford a new vehicle for any customer, but it also provides an option for people in a tough financial situation. To see if this is the right option for you, it’s helpful to learn some basic information about it.


The Buy Here Pay Here Concept

Traditionally, if you want an automotive loan, you have to go to a bank or credit union. They will put you through a whole application process where they review your credit score and financial history, ask you some questions, and then ultimately make a final decision. This is a stressful process since you are likely to repeat it many times depending on the number of banks you visit.

If you have a short or troubled financial history, this process is even worse. The options become more limited or cut off from you altogether. To avoid all these headaches, many dealerships have turned to a Buy Here Pay Here philosophy where they handle all the financing matters under one roof.

The concept is simple: the dealership itself will extend credit to its customers. Quite often, a dealership will have an entire financing center where qualified employees can help new customers explore their financing options and ultimately get approved. Thus, the “Buy Here Pay Here” philosophy: buy a vehicle and pay for it all under one roof.

For everyone, this brings extra convenience as you don’t have to go around to different banks. Once you have chosen a make, model, and dealership to do business with, you can stay right on the lot to get everything squared away. More importantly, since you are working with employees of that dealership, they will be more familiar with all of the financing options, promotions, and other ways you may afford the vehicle or save money.

For people with poor credit, the Buy Here Pay Here Philosophy can be extremely beneficial. Poor credit loans are a common way dealerships help customers who would otherwise be turned down by banks and credit unions. Employees are often more familiar with this type of loans, the dealership’s specific eligibility requirements and terms, and how it will apply to your purchase. In other words, the person you talk to about a bad credit loan will often be the most knowledgeable.


Understanding Buy Here Pay Here Auto Loans

It might seem like a natural choice to choose a poor credit auto loan if you are in a tough financial situation. While this is true for the majority of people, it is important to know all the details before making a final choice. Many times, people put themselves in a tough financial situation because they lack the necessary information to understand what they are signing.

Bad credit auto loans are very similar to the normal type of loans you can get from banks and credit unions. Specifically, they loan out the specific amount of money for the vehicle. They will also come with some type of interest rate over a specified period you have to pay it off.

It’s important to recognize that the interest rate and term limits are going to be different compared to traditional auto loans. Because of the higher risk, a dealership is taking giving a loan to someone with poor credit; the dealership has to set the terms in a way where they can minimize the potential fallout. Usually, this means you can expect a higher interest rate and/or a shorter payment timeline.

You should understand the specifics of a potential loan offer before signing on the line. The beauty of the Buy Here Pay Here philosophy, however, is that the person you speak with will be able to explain all the specific details before anything is signed. To give you the best customer service, many dealerships like to make sure their customers know all the important details to avoid future complications.


How to Take Advantage of Buy Here Pay Here

If you’re still on the fence or simply want to explore the option of financing a car through a dealership, the first step is to speak with someone at that location. Sometimes, people like to wait until they have found the vehicle they are interested in before talking about financing options. This is perfectly okay.

Whether you want to start immediately or wait until you have found that vehicle of your dreams, the most important step is sitting down and talking with one of the financial service people at the dealership. They will request some financial information from you, look up your financial history and credit score, and present all the options you have available. If something like a poor credit auto loan is an option, they will also give you the details of what you should expect regarding the interest rate and timeline.

Ultimately, the choice is yours to determine if financing your purchase through the dealership is right for you. Countless customers each day discover the benefits of buying and paying for their vehicle all under one roof, but it is important to feel confident in your decision. If you have any lingering questions, doubts, or want to continue to explore your options, do this before making any financial commitments.

By doing the necessary research, talking with the right people, and carefully thinking about your options, you’ll make the right choice for you and your automotive future.