The Good and Bad of Buy Here Pay Here Dealerships

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - December 19, 2017

Buy here pay here (BHPH) dealerships have been a topic of controversy in the automotive industry. BHPH dealers aren’t the best option for every car buyer, but many credit-challenged consumers choose (or have no choice but) to use a BHPH dealer. Here’s what car buyers can expect from a buy here pay here dealer.

The Benefits of BHPH Dealerships

BHPH dealerships don’t consider credit the same way a traditional dealer or lender does. While it may not be for everyone, BHPH dealerships offer some key benefits:

  • In-house financing – Buy here pay here dealers allow car buyers to set up their loan and buy their vehicle in one place. This is a desirable option for credit-challenged shoppers, since BHPH dealers typically don’t check consumer credit reports or scores. Instead, they focus on income.
  • Payment terms – Buyers can work with the dealer to set up an appropriate payment plan for their loan. In some cases, they can choose the length of the loan and whether or not a weekly or bi-weekly payment plan works best. The downside is that customers can usually only make payments in person.
  • Down payments – BHPH dealerships are usually upfront about the money down required for each vehicle, so a consumer can easily see what they qualify for, taking some of the guesswork out of financing.

The Cons of BHPH Dealerships

While BHPH dealers can allow credit-challenged customers to purchase vehicles, there are plenty of downsides. Cheap, unreliable, and overpriced cars are not uncommon at BHPH dealers. There are other issues, too:

  • Higher interest rates – One of the biggest cons to a BHPH dealership are the high interest rates. A buyer going through a BHPH dealer can expect an interest rate around 15-20 percent or higher. That kind of interest rate can drive up the monthly payment on even an affordable vehicle to something exorbitant.
  • Limited inventory – The buyer won’t have many options to choose from, depending on the size of the dealership. BHPH car lots typically only carry older model used vehicles that may be overpriced.
  • Hidden fees – BHPH dealers can sometimes apply hidden fees to a purchase. Look out for: (1) administration and handling fees; (2) price of the vehicle matching agreed price; (3) inspection or detailing fees; and (4) any delivery fees.
  • No credit reporting – BHPH dealerships generally won’t supply any payment information to the credit bureaus. Borrowers won't be able to improve their credit with a loan from a BHPH dealer if this is the case.

Bottom Line

BHPH dealerships can be a great way to get financed quickly, but customers need to understand the danger that can accompany this easy financing.

However, not all consumers with bad credit need to go to a BHPH dealership. CarsDirect connects consumers to local dealerships that are capable of assisting buyers in many types of credit situations. Start the process by filling out our auto loan request form today.

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


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