What is a Buy Here Pay Here Dealership?

The phrase Buy Here Pay Here (BHPH) gets thrown around a lot when it comes to the car industry. Many people sing high praise for a buy here pay here dealership while others, especially employees of other traditional dealerships, seem to have nothing but bad to say about it.

The truth is, most people don’t really understand what a Buy Here Pay Here dealership really is or why it is even around.

So…what is a Buy Here Pay Here Dealership?

• What is Buy Here Pay Here Dealership?
• Second Chance Lenders for Bad Credit
• A Buy Here Pay Here Dealership for the Win!
• Why Doesn’t Everyone Finance at a Buy Here Pay Here Dealership?
• No Two Buy Here Pay Here Dealers Are the Same
• Who Benefits From a Buy Here Pay Here Dealership?
• Don’t Let the Bad Apple Ruin the Bunch
• Buy Here Pay Here Dealership: A Stepping Stone to a Better Life

It’s a form of lending done directly by the dealership where the vehicle is being purchased.

Many of you may be asking right now, “Don’t most dealerships provide you lending then and there?”

No.

See, at a dealership that does not offer Buy Here Pay Here, customers go to find a vehicle they love first. The dealership then shops your application out to numerous lenders to see who will approve you under the best terms.

This is assuming you are not paying cash or coming in with your own financing.

For customers that have stellar credit, this is never an issue.

Most banks look at a customer with great credit and are rarely concerned about the proof of the customer. The credit score lets them know everything they need to know about who they are dealing with.

As credit score decreases, lenders start getting more strict. The number of companies willing to compete to purchase the application drops drastically.

There comes a point when a credit score drops so low that most lenders are not willing to touch the application.

The only options people are left with are a very limited number of lenders that specialize in working with bad credit car loans.

These lenders are called second-chance or subprime banks.

They tend to be extremely firm about verifying everything put down on the applications as well as having additional requirements. These include a much higher down payment, higher interest rate, and lower tolerance for late payments.

These are ways for them to be able to offset the higher risk involved in lending money to someone with a low credit score.

If you’d like to learn about how the credit scoring system works, make sure to check out our article on How to Improve Your Credit.

Eventually, a score can drop so low that even these lenders are not willing to purchase the application.

So what happens then?

The Need for Transportation Doesn’t Stop Because of Bad Credit

People still need transportation and in many cities, most actually, public transportation is not a viable solution for them. The ability to walk or ride a bicycle to get around is not a real option either.

In Fresno, CA, where our dealerships are located, it would take you hours to walk from one end of the city to the other. If you think the bus could get you there much quicker, think again. There are not very many busses running so people spend more time waiting for a bus than they do on it to get to their next route.

It’s bad enough to be without a car within our same city, even worse if you needed to get to the towns next door to us like Selma or Madera. It becomes nearly impossible.

Most people don’t have $10-20,000.00 just lying around to purchase a vehicle for cash.

Financing has become a crucial part of the American system. Without it, most people are left dead in the water, with no way to get ahead, let alone get around.

Enter the world of Buy Here Pay Here dealerships.

A Buy Here Pay Here Dealership Can Help

A Buy Here Pay Here dealership, also known as an In House financing dealership, can provide customers financing on their vehicle when everyone else has turned their backs on them. They operate in a nearly identical manner as traditional used car dealerships except for at the end.

They purchase their inventory from the same sources, they repair vehicles, they advertise themselves, and they sell cars.

The difference is all with the financing.

Instead of needing to shop their customer around to different lenders, a Buy Here Pay Here dealership keeps it all…that’s right you may have guessed it…In House.

Buy Here Pay Here dealerships make it easier to get approved since they tend to look at other areas outside of the typical credit score.

So why wouldn’t everyone just finance through an In House financing dealership?

Mainly because In House lots are not made with the typical prime credit customer in mind.

A buy here pay here car lot’s program is geared toward customers with subprime or deep subprime credit scores and is structured as such. This means that many of the vehicles will be more affordable and the down payments/interest rates may be higher.

Understandable considering that the dealership itself, meaning the owners and all the employees that make up the staff, are lending their own money so that their customers can have the transportation they need. It is no longer a massive company that can take on many losses without breaking a sweat.

Every loss, missed payment, late payment, or worse, affects a buy here pay here dealership in a big way.

This also means that there tends to be more contact between the dealership and its customers in order to make sure that everyone stays on track with their agreed-upon payments.

A healthy line of communication is exactly what our customers need. This helps them pay their vehicles off on time and rebuild their credit in the process. And this brings me to a very important point!

No two Buy Here Pay Here dealerships are the same.

Same as you might have a dealership that specializes in selling lifted trucks vs one that specializes in older trucks, In House financing dealerships can vary greatly. Just because they all follow a similar mold does not make them anywhere close to the same.

There is a huge gap when it comes to the quality of not only the vehicle, but the Buy Here Pay Here financing as well.

As I mentioned earlier, most In House lots will provide a more affordable vehicle. This means it might be older and with higher miles.

It doesn’t mean these vehicles are bad, only that making sure you inspect them prior to purchase should be a crucial step of your buying process. It should also be when purchasing anything that is used, but more so here.

At Westland Auto Sales, we strive to provide our customers with nicer, newer, and lower mileage used vehicles. You should not only feel proud of what you’re driving but at ease that you won’t deal with breakdowns or repairs on a continued basis.

We take that a step further by providing a free 2-year warranty. Talk about peace of mind, right?

You can also count on a lower and more affordable down payment. Having a little extra money in your pocket can make all the difference when it comes to those unexpected emergencies, am I wrong?

Nearly all Buy Here Pay Here dealerships do not do this and instead, ask for half down or higher. But the real kicker comes when the customer is already financed.

Improve Your Credit Score with our In House Program

There are very few Buy Here Pay Here dealers in our country that report their customers’ payment history to the bureaus.

In fact, Westland Auto Sales is the only In House dealership from Visalia to Merced that reports to credit in order to help you improve your score and best of all, improve your future.

Make sure that whatever In House dealer you are considering purchasing from will be reporting your timely payment history to a bureau.

By now you probably see that people with bad credit are not the only ones that could benefit from our Buy Here Pay Here financing. Anyone with no credit history can get a major boost by having an installment loan paid off in their report.

Since we do not focus on the credit score and instead more on stability and ability to pay, our program also benefits individuals who may have too many open auto loans to qualify for another.

Many of our customers are in these types of situations where they have additional income that banks do not accept. They need a third or fourth vehicle for a family member but are completely stuck.

In these cases, we can also help their family member build up their credit as a cosigner on the loan while paying off the vehicle. A win-win for everyone!

Buy Here Pay Here dealerships can get a bad rap that normally stems from a few dealerships skirting the lines. They are not in it for the customer and ruin it for those of us that are.

Like any sector, you have your good and bad apples.

Couple that with a lack of understanding of how In House financing works and a salesperson trying to knock out their competition and it becomes even more understandable why many employees of other used car lots bad mouth the financing.

Most owners and employees of In House lots are good people who truly want to help their customers, just as most customers of In House lots are good customers.

Finding the Buy Here Pay Here program that will work best for you is crucial to your experience of paying off your vehicle.

Buy Here Pay Here financing is there to help you get back to more traditional financing.

If you are not reported to credit, you can get stuck in an endless loop. You’ll have to go from one In House lot to another and this can be extremely costly.

Remember, whichever dealership you choose, your payments need to be reported so that they can help you repair your credit.

Now go get yourself back on track to the future you deserve.

Disclaimer: The information provided in this article is for educational purposes only. It is not financial advice. Always consult with a qualified financial professional for personalized guidance.