A poor credit score is big enough a reason for people not being able to finance a new or used car as dealerships don’t risk selling cars to financially-troubled consumers. Having been rejected and turned down several times in the past by dealerships, they may finally end up going to a Buy Here Pay Here dealership. But what exactly does a BHPH offer that other dealers don’t? Why do buyers consider BHPH as a last resort even when they finance buyers when others don’t?
BHPH dealership is no different than other dealerships except in terms of buying process which is reverse of a typical buying process with most dealerships. Here with BHPH, you may be required to discuss your credit history and budget limit first before looking at vehicle options. Whereas typically, buyers can talk about the car they would want to buy rather than discussing stuff related to credit and payments. By getting insights into your credit limits first, the BHPH dealership would come up with the suitable and, affordable car for you.
Other difference is that you are obliged to pay at the dealership (PAY HERE) when you are buying from a BHPH. Either by a check cash or money order, most BHPH would mandate weekly or biweekly payments rather than monthly payments to a third party lender.
What are the advantages?
As you pay to the dealership itself and that too in small weekly or biweekly installments rather than a large monthly payment, it could be to the advantage of those people whom a large sum of money is a challenge to be paid monthly. The Buy Here Pay Here could be a relief to such people.
Also, since the approval does not majorly depend upon the credit history in this option, no time is needed to review your credit history. The approval can be given the same day by the dealership and you can clearly plan more things in your priority list. Otherwise, people with bad financial conditions waste days, even months, waiting to get financed and in the end, they have to face disappointment being turned down by all known sources.
Your budget and car needs are reviewed by the BHPH dealer way before the final deal is made. Therefore, you have a little more liberty to make a choice in terms of weekly or bi-weekly payment options, and can satisfactorily look over the available options before agreeing on the final purchase. You can actually have more options while dealing with a BHPH than with a typical lender and have considerable time to review all the conditions and options. Also for trade-in options, you can enjoy more flexibility than you can with a typical dealer.
What are the disadvantages?
You will be going to a BHPH because your credit does not look good enough; this credit factor is used by the BHPH to their advantage so that they can charge you higher interest rates. Since they are not supposed to comply with the same regulations as other financing companies are, they are free to charge you interest rates as big as twenty-six percent. In that case, you must compare different BHPH dealers and their financing criteria. The BHPH dealers may make you pay more often in a month at their office site compelling you to visit them every time the payment needs to be made. It may be challenging if you have no extra time and have some transport inconvenience. You must take time to consider all the advantages and disadvantages of BHPH and, check whether the advantages outweigh the disadvantage or not for your unique situation.