A buy here pay here car dealership is a type of car dealership where buyers are given credit for their purchase. The dealership extends the credit until the buyer can pay off the car in full. This is a common practice among car dealers, and it allows consumers to purchase cars without making large upfront payments. Although BHPH dealerships are less expensive than traditional dealerships, you should always shop around before you make a purchase.
Helpful For Credit-challenged Borrowers
One benefit of buy here pay here dealerships is that in-house financing is possible, which can help consumers build their credit. This financing option is particularly helpful for credit-challenged borrowers. When a consumer makes on-time payments, their monthly payments are reported to the credit bureaus, boosting their credit score.
A disadvantage to buy here pay here financing is that it may take a long time to get approved. This is especially true if you have a poor credit score or have no credit history. You may need to provide proof of your income before you are approved. Some dealers will offer no-money-down specials, so it may be best to apply for these financing options.
Another disadvantage to buy here pay here financing is that the total car cost can be higher. This is because buy here pay here dealers know that you won’t be able to secure financing elsewhere. Because of this, the total cost of the car may be higher than the vehicle’s worth. This condition is known as negative equity.