How the Buy Here Pay Here Car Dealer Works
Posted: Saturday, January 15, 2011
by Jim Klark
Car Buying How to and More!
You may have heard some say it or heard it on the news, but many people have never heard of a Buy Here Pay Here car dealer and if they did they did not know what it meant. I am not talking about a traditional car dealer. I am talking about an automobile dealer that sells used vehicles to people that are unable to qualify for the standard auto loan with a conventional lender or automobile manufacturer.
The average BHPH car lot or dealership is a small operation that has an inventory of a few dozen used cars that they sell and then act as the bank for those car buyers. The vehicles are usually several years old and often have high mileage, but in good mechanical condition. Instead of the customer coming to the dealership and selecting a vehicle to purchase the first step is to see if the dealer is willing to finance the buyer. This will involve filling out an application, proving income and place of residence, personal references and verifying income.
Qualifying at the BHPH Car Dealership
The process of qualifying for an in house auto loan at the dealership may take anywhere from an hour to a day or two. Once the applicant is approved they are instructed which vehicles they can choose according to the personal financial situation. The paperwork is signed and the deal is done, but there are conditions that are very different than the conventional auto loan. One such condition is the payment which is due either weekly or bi-weekly based on the frequency of the borrowers work pay period and must be paid at the dealership. The idea is that it is easier to make 4 small payments on the day they get paid rather than one large payment monthly. It may be inconvenient, but financing people with bad credit is risky so if you have to make four payments a month in order to get financed it’s probably worth the extra effort.
Since the financing is done in house by the Buy Here Pay Here car dealer instead of some other lender it really comes down to both parties agreeing on the terms and conditions of the financial arrangement. The downside for the customer is that the interest rate is high and there isn’t much selection when it comes to the vehicle, but the primary customer of the BHPH car lots or dealers is a person with very bad credit which may have had prior repossessions or bankruptcy and a very bad history of paying their obligations. It doesn’t mean they are bad people because bad things happen to good people all the time. If it wasn’t for in house financing they wouldn’t have much chance of getting a vehicle that they need to keep their job and do all the other things that they need to do every day.
This article was written by Jim Klark a veteran of the autmobile sales industry. You can learn more about Buy Here Pay Here Car Dealers and how the work at BuyHerePayHereVehicles.com
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