Purchasing a car from a traditional dealership can be very tedious. It is even more difficult for people with below average credit score. However, dealerships who use Buy Here Pay Here models make acquiring cars more accessible even to those with low credit scores. To know how that is possible, continue reading below.
The History of Buy Here Pay Here Dealership
Before we go and look at how the BHPH loan system works, let us first discuss how it became what it is today. The beginnings of BHPH can be traced in the early 1970s in the States. During that time, the country was experiencing a savings and loan crisis making it difficult to have sufficient credit scores for people to apply for car loans.
As a result of that scenario, the Buy Here Pay Here car dealership came to be a solution for those with struggling credit scores or those who simply do not have the means to pay cash upfront.
Buy Here Pay Here Financing
Obviously, the financing schemes for Buy Here Pay Here car dealerships are quite different from the traditional ones. You may think that catering towards people who are considered as high risk in terms of credit score is risky for car dealerships but BHPH car dealers are able to mitigate the risk by starting RFC or Related Finance Company.
RFC is a form of commonly used alternative auto financing method. RFC allows customers who have bad or no credit to finance a car from a Buy Here Pay Here dealership. Moreover, RFCs usually give discounted rates making it better compared to other party lenders that dealers work with.
The Advantage of Buy Here Pay Here Loans
There are several advantages of getting a car from a Buy Here Pay Here car lots. Here are some of them:
1. Easy Financing
The major selling point of BHPH dealership is being able to purchase a car despite your financial standing. No need for long application and extensive credit background checks. Also, you set up your loan payments in the same place where you will be choosing your car which is less of a hassle.
Some BHPH dealerships also offer several promotions such as trade-in deals. Doing this will help significantly reduce your loan contract price and down payment. However, the valuation for the car you will be trading in is often lesser and you could get better money if you sell it independently if you have the time and patience for that.
3. Well Inspected Vehicles
Another advantage of BHPH financing is the quality of the cars. They are thoroughly inspected to make sure that they are in proper running condition. All of the vehicles are also certified pre-owned cars.
4. Straightforward Process
The process of getting a car financed from BHPH dealers is pretty straight forward. All you have to do is find a Buy Here Pay Here near me and apply for financing online then choose a vehicle of your choice. After that, you can test drive the car and sign the necessary papers needed. Simple, right?
The Disadvantage of Buy Here Pay Here Loans
Conversely, Buy Here Pay Here car lots loans can also have significant drawbacks. Here are some of them:
1. Limited Car Choices
The downside of BHPH is that they have limited car inventories. This means that you are less like going to get the exact model or color of your choice. But, it wouldn’t really matter a lot if your purpose of buying a car is to get you from point A to B.
2. High Rates
Credit scores will still matter in determining how much interest you will be paying. If you have bad or no credit, expect to be paying a higher rate because the financial institution is taking a significant risk in lending you money to acquire the vehicle. Furthermore, in some cases, lenders often put tracking devices on the vehicle as a security.
Before searching for a Buy Here Pay Here near me, it is important to first weigh your situation. Ask yourself whether it is really important for you to acquire a vehicle now despite a large overhead or not. If the answer is yes, then the best way for you to get a vehicle fast without fuss is to definitely opt for a Buy Here Pay Here dealership.