Buy Here Pay Here vs. Sub-prime Financing

Cars are a necessity especially if you're always on the go and you live in a large city. It is convenient, it helps you reach destinations without having to wait long for trains for cabs, and it is something worth investing your hard-earned money in.


Window shopping for cars is one thing, but actually buying them is a totally different story. You need to make sure you're financially prepared for it because even the least-expensive car out there can still be a bit pricey.


Fortunately, there are options you can take if you can't go beyond your financial capacity. There are a lot of ways to go about the situation, but you need to have a clear understanding of what they are first.

Buy Here Pay Here

Buy here pay here is a financing option that those who can't get loans from traditional lenders can avail of. Since they're bent on selling their cars and making the most out of whatever interest they will be charging you, there's a huge possibility that they will approve your loan application.


Note that you'll have limited options since buy here pay here dealerships will put more premium on the topic of financing before entertaining any conversation about cars. You'll have to operate under a limited budget, which can be a bit tricky. Now, the good thing about buy here pay here dealerships, is you can easily fix your credit history for as long as you pay on time. With low interest rates, it is impossible for borrowers to not settle their payments before the due date.

Subprime Financing

If you left the buy here pay here dealerships wanting to seek other options, you may want to look into subprime financing. According to a research conducted by Experian Automotive, more than 50% of people who buy used cars have credit scores below 660, which is the cutoff that determines if an individual is a credit risk.


Subprime financing is an option offered to individuals who are not qualified for a traditional loan because of their poor credit scores. It has a higher interest rate compared to conventional loans, but it's more lenient in lending money to people who are credit risks.


Both options agree on one thing: everyone deserves a car, no matter terrible their credit scores are. However, the bigger question is, which one's worth the risk? As with all things in life, it is important that you do your own research before entering into any agreement. The more informed you are, the easier it will be for you to make the right decision. While you're at it, you may want to know what your credit score is. That way, there won't be any surprises once you fill out your loan application. The process does not end when you get the approval. In fact, that's just the beginning. Make sure that you pay your dues on time so can rebuild your credit as soon as possible.