The phrase "buy here, pay here" means that you make regular payments to the place from which you made a purchase. Car dealerships that offer "buy here, pay here" financing specialize in providing their customers with in-house loans to finance the purchase of a vehicle. Instead of needing to get approval from an outside lender, like a bank, you can finance your car directly with the dealership you are buying from with "buy here, pay here," or BHPH, dealerships.
Buy Here Pay Here vs. Outsider Lenders
There are very few differences between financing the purchase of a car through a BHPH dealership and choosing to work with more traditional outside lenders.
The primary difference is the order in which the steps of the buying process happen. With traditional financing and dealerships, you would choose which car you want to buy based on an educated estimate of monthly loan payments and the budget you prepared before shopping. After starting the buying process with the dealership, you would then seek approval on the loan with an outside financing company. Alternatively, a BHPH dealership will usually work on gathering your credit and financial information first. Then, armed with your financing information such as internet rate and the payments you can afford, the salesperson will show you cars that fit your situation. "Buy here, pay here" dealerships can stop you from falling in love with a car you can’t afford by keeping the options realistic.
Buy Here Pay Here for Bad Credit
The financing available with BHPH car dealerships is usually the best loan option for buyers with a bad or limited credit history. Dealerships are often more willing to work with your low credit rating as long as you can provide proof of a steady income and an ability to make the ongoing payments. The approval qualifications for in-house car financing are less strict than those with outside lenders and banks. Additionally, the structured payments you make to the car dealership over time can help improve and rebuild your credit.
Trade-In Value
A used car lot that has "buy here, pay here" financing options is also more likely to offer a higher trade-in value for your existing car. BHPH dealerships take into account the real equity of your car and its ability to be resold, which lends itself to more flexible trade-in requirements. If you are on a strict budget and cannot afford a sizable down payment, the increased trade-in capabilities found at many dealerships offering in-house financing will make the initial purchase easier to accomplish.
"Buy here, pay here," or BHPH, financing for your next car is a way to work around poor credit, shop realistically, and make the most of your trade-in vehicle.
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