Buy here Pay here Car Dealerships Financing Benefits
If you want to buy a car but don’t have good credit or money saved up, there’s one option that could work for you: “buy here pay here” financing from the dealer. This type of loan comes straight from them – meaning they sell and finance their own products in-house. No outside financial institutions are involved at all. But this also means higher prices than normal.
A buy here pay here dealer is the best option for buyers that need financing. You can make all loan arrangements and sometimes even have payments made at the same dealership where you purchased your car. This one-stop shop acts as an extension of yourself, dealing with any issues or questions on behalf of customers in order to ensure their experience goes smoothly from start to finish without hassle.
When you finally make the big purchase of your car, it can be an emotional experience. You might feel like trading in that older used vehicle as a down payment.
Buy here Pay here in Brief
You can buy a car at any number of traditional dealerships, but it’s important to be aware that buying from these businesses could mean you are financing with an “approved lender.” This means they will pass on information about your purchase and monthly payment amount for approval by other lenders in their network.
You’ll need to verify your income and proof of residence, but most buy-here, pay-here dealers won’t check with credit. You’ll also likely need a down payment for used cars from these types of dealerships.
Your loan amount is determined by the dealership after they see what you can afford. They show cars within that price range and then make sure to send all payments directly.
Buy here Pay here Car Dealerships Downsides
High-Interest Rates & Fees
Buy-here, pay here car dealerships are known for being tough about interest rates. They won’t cut you any slack when it comes to paying back the loan with their incredibly high 20% average rate of interest on buy here loans which is much higher than what most people find at banks or credit unions who offer lower numbers across all ranges in comparison.
There are many risks when it comes to car loans. Interest rates on loans are high, and it’s possible to end up paying a lot more than what your vehicle is worth. Traditional lenders usually limit how much someone can borrow based on its merit. With high costs, financial trouble can result from buy-here, pay-here dealerships. Almost one-third of borrowers defaulted on their loans in 2019 according to recent reports by the National Independent Automobile Dealers Association (NADA).
Troublesome Payment Plan
One of the downsides to buy-here, pay here loans is that you may need weekly or biweekly payments. Monthly payment plans are more convenient than making these types on time.
Request a Vehicle History Report
If you want to know the truth about your new car, request a vehicle history report. This will tell how it has been treated and if anything is salvageable before buying one for yourself.
You should always request an independent report from Carfax or Experian if they won’t provide proof themselves because those two services offer unbiased information on cars as well as their VIN numbers.
Buy here Pay here Car Dealerships Can track your Car
A tracking device can be installed on a Buy Here, Pay Here lender’s vehicle to make sure you can easily repossess it if need be. About 45% of these dealers choose an electronic monitoring service. They monitor the activities surrounding their collateral without ever having physical contact with them again.
Dealers want only reliable customers so they’re going above and beyond by installing some pretty sophisticated technology. It will let them know where we are at all times while driving down our credit score.