Buy Here Pay Here Financing

Buy Here Pay Here Finance Companies

Buy here pay here finance companies come in a many varieties, but typically car dealerships are acknowledged as the most prevalent for buy here pay here financing because it is so convenient for the borrower in need. These borrowers that use buy here pay here financing companies are considered "sub prime". Their credit is usually the worst of the worst and therefore few, if any, traditional lenders want to take the risk of a loan becoming default. So buy here pay here companies seize this opportunity to profit by financing a vehicle to a borrower that will have to pay a much higher interest rate than a "prime" borrower. Buy here pay here finance companies will often make a killing on the interest rates paid on the auto loan by the needy borrower because they are much higher than for run-of-the-mill financing.

How Buy Here Pay Here Financing Works

As previously stated, buy here pay here financing often works in conjunction with the dealership--they often are the seller of the car and the loan company.

So let's say you purchase a car for $5,000. As the lender they might require a $1,500 down payment so they can limit their potential downside of a default auto loan. Then the buy here pay here finance companies often require you to make regular weekly payments of around $50 in order for you to prove that you financially responsible. Once your weekly paycheck from work comes, the car payment is expected soon thereafter. If you do not come up with the installment the buy here pay here financing companies can and will repossess your vehicle. This process might not be pretty, but it can be remains advantageous for consumers that are in a serious bind.

Is buy here pay here financing for you?

If you receive your buy here pay here financing from the dealership it pays to be skeptical because sometimes they are in the business of taking advantage of you. Some used car dealerships that specialize in these transactions have been accused of targeting military personnel. By selling lemons to personnel that come and go a lot they as much easier to exploit. For example, soon after the purchase is final a car purchased via buy here pay here financing begins to break down. Often the military service member stops paying the loan installment to the finance company. Because they might be off the military base for an extended period they completely abandon hope for the car. The dealership then will have the vehicle repossessed and then will resell this car, oftentimes to another unsuspecting soldier.

Buy Here Pay Here finance companies make high margins because you are in between a rock and a hard place with few, if any, financing options. You have bad credit and you need a car to live, and you cannot find financing elsewhere. Some bad financial decisions in your past have helped to get you in this position so now you need to do some homework before you try one of these dealerships. Often there buy here pay here finance companies will be legitimate, but you do not want to be the one the gets the lemon.

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