Buy Here Pay Here (BHPH) dealerships are car dealerships that operate without a third-party lender. Simply put, a person that wishes to buy a new car may borrow from such dealerships. Traditional financial institutions such as credit unions and banks may decide not to lend to a particular borrower because of credit issues.
Buy Here Pay Here dealerships simple extend credit, which means that the seller loans out money to the buyer. While this form of lending has been around for over 4 decades, people still believe myths about it. Here are the top 7 myths about Buy Here Pay Here Dealerships debunked.
1. The Dealerships Only Sell Junk Cars
The truth is that Buy Here Pay Here dealerships simply don’t stock their lots with as many junk cars as possible. In fact, many such dealerships ensure that all the vehicle they stock undergo quality inspections and clean title verification before being accepted into their inventory. The dealerships even do service and repairs if any issues are found, which means that you are buying a quality vehicle when you buy from them.
2. The Dealerships Only Want To Trick Buyers Into Buying Vehicles They Cannot Afford
Nobody wins if you are unable to pay for the vehicle the dealerships sell to you. It is why the financing process typically involves a personal meeting with one of the financial representatives of the dealership. The representatives will sit down with you and discuss things such as your existing expenses, income, and budget to determine the payment terms you can most comfortably afford. The dealerships want you to succeed in paying off the car loan with full and timely payments.
3. The Dealerships Can Finance Anyone
Buy Here Pay Here dealerships often look past a person’s credit score to determine who is eligible for vehicle financing. The dealerships believe that past credit mistakes don’t necessarily reflect the current financial situation and such want to offer you the chance at being financed even with no credit or bad credit. However, if your financial situation currently cannot allow you to make your car payments in timely fashion, it is highly unlikely that your application will be approved.
4. The Dealerships Are Loosely Regulated
Nothing is further from the reality. Businesses have to comply with both state and federal regulations. The entities/institutions involved with extending credit and lending must adhere to the set regulations, which are wide and sweeping. The regulations also involve several different agencies, which means that no Buy Here Pay Here dealership can avoid them.
5. The Full Amount of the Vehicle Must Be Financed
The myth assumes that dealerships only want to maximize the loan and subsequently maximize the interest. However, nothing could be further from the truth. Dealerships accept down payments and only the balance that remains on the vehicle has to be financed. The goal of the dealership is to sell vehicles and not necessarily getting involved with complex lending programs. If a person only wants to finance 50 percent of the cost of the vehicle he/she is free to do so.
6. You Will Be On Your Own Once You Drive Away From the Lot
Buy Here Pay Here dealerships often offer service agreements or warranties with the used vehicles that they sell. In many instances, each vehicle comes with its own warranty and customers often gain access to the dealership’s discount garages. The dealership doesn’t want car buyers to live in constant fear of car trouble, which is why they offer whatever is possible to prevent breakdowns.
7. The Dealerships Charge Outrageous Interest Rates Such That Buyers Are Unable To Keep Up With Payments
Buy Here Pay Here interest rates are typically higher than those charged by traditional dealerships, but it is not a strategy for ensuring that buyers are unable to keep up with payments. The justification for the high interest rates is the risk involved in financing customers with either no credit or bad credit. The dealerships want to offer financing to customers that might have been turned away elsewhere and it is their goal to help you out if you need a vehicle but don’t have good credit. However, they need to account for the risks involved in such transactions.
The Bottom Line
Buy Here Pay Here dealerships only want to help customers get a vehicle even after being turned away by other dealerships. The BHPH dealerships are in the business because they want to see their customers succeeding in paying of their car loans and building a better financial future.
It is thus important not to believe all the myths that you hear about the Buy Here Pay Here dealerships such as the ones discussed here. The BHPH dealerships simply want to help you get behind the wheel of a quality vehicle at an affordable price.