Purchasing a car seems to have become an everyday issue. While some of us take this activity for granted, there are many people who can not approach the average car dealer, choose their choice car, and qualify for the necessary financing to allow them drive home in a another car. In these hard economic times, it has become traditional to find alternative ways to purchase a vehicle. The most common way is by seeking information on how to buy here and pay here car loans.
This is one of the ways a person with a bad credit record or a financial problem can eventually buy a car like the rest of the affluent population. Buy Here Pay Here car loans are now operated mainly by used car dealers all over the United States to assist car buyers who for one reason or another can not afford to access the traditional vehicle financing.
What Is a Buy Here Pay Here Loan And How Does It Works?
A close examination in the sales of vehicles through the buy here pay here dealers indicates a significant rise in the last ten years. For example in a single year such as 2001, there were 1.2 million units purchased through this arrangement which accounted for 4.1% of all car dealer sales in that year. In the last ten years BHPH purchases reached 2.4 million units and accounted for close to 8.6% of all used car sales.
Normally, BHPH car dealerships differ from the normal franchise car dealerships in so many ways. A conventional dealer will always rely on third party finance institutions that are responsible for approving the credit worth of customers. Examples of these institutions include local banks, the Ford Auto Credit, credit unions, and auto finance companies. Anyone with subprime or deep subprime credit scores can hardly get approval from such institutions.
The concept of Buy Her Pay Here car loans was borne from the growing demand of vehicles by people who could not afford outside financing due to bad credit ratings. Normally, any person’s credit rating is a fragile condition that can be adversely affected by unforeseen circumstances in the job market. Other factors include divorce, extended hospital stays, or basically a job loss which has become somewhat prevalent in these days.
A person who has been living an organized and well balanced life rooted on a single stream of income might just as well become unemployed resulting in a chain reaction that will eventually affect his or her credit score to an extent that they can longer afford a simple thing as a car loan.
Advantages of a Buy Here Pay Here Car Loan
Purchasing your vehicle at a buy here pay here dealer has several advantages some which include:
A car has become a basic means of transportation in today’s world. This basic need should never be denied anyone regardless of their credit status. Most people with bad credit scores are usually turned down by lenders should they want own cars. Fortunately, the only option they usually have is by using the services of BHPH car loans.
It is also customary for BHPH dealers to check your credit score before they accept to sell you a car. If you are able to process your payments timely they are apt to report your honesty to credit bureaus which can eventually improve your credit history in the course of time.
The existence of this institution of buy here pay here car dealers ensures that your old car can still find a buyer if you are interested in disposing it off.
Buy Here Pay Here Lots Explained
Car purchase is something every individual and family is likely to face at some stage or other so it is helpful to understand what Buy Here Pay Here Car Lots are and what they specifically offer to any prospective client. It is also helpful to understand how they differ form other forms of car purchase option centers, too.
Finally, it is inevitable that there will be both advantages and disadvantages involved when opting for the purchase model available at such lots, largely depending on the individual status and circumstance of the buyer. It is helpful, therefore to consider what those advantages and disadvantages are likely to be.
In simple terms a prospective car purchaser visiting Buy Here Pay Here Car Lots is able to arrange a loan at any one of these lots and then make payments of the loan at that particular dealership. This is often known as in house financing. The alternative of approaching some third party, usually a bank, for the finance, is where the difference predominantly lies. Often payments are made to the dealership on a weekly basis. In short, then, the car is purchased from the dealership and payments of the loan obtained to buy it are also made to the dealership.
In many cases the differences between this financing option and more traditional ones are only subtle. Perhaps the main difference between the dealerships that offer only this finance model as opposed to others that offer multiple options, sometimes including this one, mainly centers on the buying process itself. When opting for the traditional it is often the case that relevant financial discussions come at the very end of the shopping and purchasing experience.
At Buy Here Pay Here Car Lots the opposite is usually the case. That is, the prospective purchaser will be questioned and will usually also have to agree to a credit report check. As a result of such questioning and checks, a certain monthly payment range and the requisite level of down payment will be arrived at. Following that, the prospective client will be shown cars that suit the specific financial standing of the client. Yet another advantage relates to the fact that these dealerships tend to be much more flexible in terms of accepting older model car trade-ins.
Conversely there are disadvantages to carefully weigh up, too. Where this option is the only feasible option available to a prospective buyer then in spite of such disadvantages there will be a strong temptation to accept them as an uncomfortable but unavoidable fact of life. That even may be the best approach, too, depending on how necessary it is to have access to car ownership. One of the main disadvantages of buying from these car lots relates to almost certainly having to pay far more than would be required at more regular dealerships. In fact it could reach the level of thousands of dollars difference both in terms of the car cost itself and to the additional finance charges on top.
Arguably, even though it has already been stressed that it is often the only source of available to some, there are some finance companies out there specializing in assisting those encountering car purchase difficulties. Also, unlike the BHPH car lots, they do their best to offer solutions that do not include any down payment at all. At any rate, though, it is a fact that the overriding disadvantage of car lots is a financial one along with the limitation of the choice of cars made available for purchase once a deal has been mutually agreed.
In conclusion, then, it is clear that Buy Here Pay Here Car Lots are dealerships offering in house financial packages specifically targeting individuals with low credit status and far from perfect financial standing. A loan is arranged, subject to some degree of financial down payment from the client, for the purpose of buying a car from the car lot itself. Regular repayments of the loan, along with additional finance charges, are then made by the client to that car lot center. Especially for those individuals with a low credit score and a less than perfect general financial standing the offer is an attractive one.
The shopping and buying experience differs to those found at more traditional outlets as the car lot is eager, first, to establish certain financial parameters and arrive at a suitable monthly repayment range along with an appropriate down payment figure and, finally, the appropriate finance charges to add on to the deal. Consequently there is no escaping the fact that the service provided comes at relatively high financial cost regardless of certain other attractive benefits.
Where To Find A Buy Here Pay Here Deal
In most cases, buy here pay here lots are usually located within a network of used car dealers in small corner lots, auto repair facilities with an office, or in a bay area for used cars where they can repair used cars and sell them for a profit. With the current financial crisis, new car dealers have also taken up the Buy Here Pay Here (BHPH) format of selling cars to accommodate customers who can not qualify for an automobile loan through a back office. BHPH car loans are now available in all shapes and sizes.