What Makes Buy Here Pay Here Different?

Get Car Financing
Even with poor credit.

By

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.


, - June 18, 2019

Are you confused about how subprime lenders differ from buy here pay here (BHPH) dealers? BHPH dealerships may offer car financing to those with bad credit or no credit, but they’re not the same as special finance dealers that work with subprime lenders.

BHPH Dealers vs. Subprime Lenders

BHPH dealerships and subprime lenders have the same main goal: to get you approved for an auto loan if you have bad credit, no credit, or other credit issues.

Just how they qualify you for a car loan and their requirements are what makes them different from each other. BHPH dealers are also lenders and may not report payments or loans to the credit bureaus, while subprime lenders work as a third party for special finance dealerships do report.

Still confused? Let’s break down how buy here pay here dealers are different when compared to subprime lenders by looking at three different areas.

Basic Requirements for Approval

Buy here pay here dealerships – Most BHPH dealerships don’t check your credit, and base approval on your income. It’s much easier to get approved for a BHPH auto loan as long as you make enough money. They also accept a wider range of income sources, including tip and off-the-books income, and typically ask for proof of income, which you can provide by bringing in a recent computer-generated pay stub showing year-to-date income.

Subprime lenders – Subprime lenders check your credit, and ask for more documentation than a BHPH dealer in order to approve you for a car loan. These lenders usually ask for proof of income (a recent computer-generated pay stub showing year-to-date earnings), proof of residency (a recent utility bill in your name for the address listed on the application), proof of a working phone (a recent landline or contract cell phone bill in your name), and a list of personal references. In some cases, they may also ask you to get a cosigner.

CarsDirect Tip: Make sure you check your credit score and reports before heading to a dealership. You may be surprised by what your score is.

Down Payment Requirement

Buy here pay here dealerships – BHPH dealers almost always require a down payment. The amount required typically depends on the cost of the vehicle you choose. Make sure you ask the dealership about their down payment requirement ahead of time so you're not blindsided when they tell you how much you need to put down.

Subprime lenders – Subprime lenders also typically require a down payment, but how much you’re required to put down can vary by lender. Generally speaking, subprime lenders ask for a minimum of $1,000 or 10% of the vehicle’s selling price, whichever is less.

CarsDirect Tip: You can use cash, trade-in equity, or a combination of both to meet the down payment requirement – or to even make a larger down payment than what's required.

Vehicle Selection

Buy here pay here dealerships – BHPH car lots are unpredictable. One thing is for certain though: they only carry used vehicles. Some offer lightly used newer models with low mileage, while others have older models with over 100,000 miles.

Subprime lenders – Because subprime lenders work through special finance dealers, your car selection is limited to what's on the lot, but it could be quite large compared to a BHPH dealership. While most bad credit buyers opt for used vehicles, it’s possible you could get a new car or certified pre-owned vehicle. It all depends on what’s on the lot, and what you qualify for.

CarsDirect Tip: Any time you're thinking about purchasing a used car, no matter if it's from a BHPH or a franchised dealer, you should always be thorough when you check it over and have it inspected by a certified mechanic to make sure it’s worth the investment.

Ready to Find Financing?

Bad credit and no credit car buyers have limited options when it comes to auto financing. Although banks and credit unions offer pre-approval, it’s unlikely someone with little or no credit is going to get pre-approved for a car loan.

If you need help looking for a dealership that’s an expert with the bad credit car buying process, CarsDirect is here to get you started.

We work with a nationwide network of dealers that have the lending resources available to help car buyers struggling with bad or no credit. To get started, fill out our free and simple 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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