What is a Buy Here Pay Here Car Lot?

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If you have been looking for a new car, you probably started with the major dealerships. This is where most people start—and it’s also the most logical place to start, until you discover that they won’t offer you financing. This makes it extremely difficult to buy the car you want. If they don’t have any financing options, your choices are to go directly to the bank and ask for a loan yourself, or to pay straight cash for the car, right? There is another option—a buy here pay here dealership.

If you have a less-than-perfect credit history, no credit at all, or a poor credit score, traditional dealerships won’t be willing to work with third party lenders to help you buy a car, simply because they view you as a risk and feel that the only way to guarantee payment is to have you pay in full. This isn’t true with buy here pay here dealers.

What is Buy Here Pay Here?

This kind of financing, sometimes called BHPH financing, means that the dealership becomes the lender. Instead of working with a third party bank or credit union, the dealership itself provides you with the loan and you pay the dealership every month, instead of the bank or credit union. That makes the dealer sort of the one-stop for those looking to purchase a vehicle.

The buy here, pay here dealer has complete control over who they give a loan to, making it possible for them to offer 100% guarantees to their customer. They can decide to give a loan even to customers with poor credit or no credit at all. These dealers are far more likely to give someone a loan who would otherwise be denied one by a bank or credit union, as they want to assist those in such a situation.

Often times as long as you’re over 18, have the necessary paperwork and a job, there is nearly a 100% approval rate among these kinds of dealers.

Because you pay the dealer instead of the third party lender, finding a dealership that is either on your commute or near where you live or work can make it extremely convenient to make your payments. Some BHPH dealerships do require bimonthly or weekly payments, instead of just monthly payments, which means paying in person is usually the best way to ensure that your payment is on time, rather than just tossing a check in the mail.

The best way to identify a BHPH dealership is to look for signs that say something like “We Finance,” or “You’re Already Approved!” or “Poor credit, No credit? No problem!” (like here, at Frank’s) This is usually a good way to tell that the dealership is a buy here, pay here dealer. Some large, chain dealerships do offer special financing from time to time, but they will not offer the same benefits of a buy here, pay here dealer.

Benefits of Purchasing from a Buy Here, Pay Here Dealer

There are many benefits to purchasing a car from a buy here, pay here dealer. These dealerships provide ownership opportunities to those who would otherwise not be able to purchase a car. Benefits include:

  1. The ability to purchase a car to build your credit. If you do not have a credit score, because you have never had or used a line of credit, you probably have no credit score, which can be just as bad as having poor credit. Unless someone is willing to cosign with you, most traditional dealerships will not sell to individuals with no credit. A BHPH dealer will.
  1. The ability to purchase a car to rebuild bad credit. If you have a spotty or downright dismal credit history, purchasing from one of these dealerships means you have a large, steady loan to help improve and repair your credit. Of course, this is only if you stay on top of your payments, but because the payments are through your dealership and not a third party, there may be a higher chance of that happening.
  1. Better trade in values. If you have a car that you want to trade in for a discount on a new car, buy here, pay here dealers are often far more likely to be amenable to taking even junk cars and cutting the price of your new car. This is because they are more likely to be able to sell that car than a traditional dealership.

Buy here, pay here dealers are a good option for those who have been turned down by traditional dealerships. If you know that you do not have a credit score or that your credit score would immediately disqualify you from purchasing at a normal dealership, you can still purchase a great car, from a reputable dealership with a buy here, pay here financing option.