Why choose to do business with a Buy Here Pay Here dealer? The reasons might not always be obvious, and in times of fluid loans, it can be incredibly tempting to go whole hog on a new car from your typical car dealership. But if you have bad credit, then there are critical differences between traditional car sales, and a BHPH dealership and finance center. Paying attention to the differences could mean the difference between rebuilding your credit, and sinking further into debt.
Here are just some of the ways the Buy Here Pay Here model differs from car dealerships:
1. BHPH dealerships typically work with bad credit, or no-credit, customers as these are the drivers least likely to be served by other car dealerships or financial institutions.
2. BHPH dealerships are more likely to take a financial risk on a bad credit driver than a new car dealership--though, with interest rates being so low for the last 7 years thanks to decions made by the Fed, some new car manufacturers have been financing people with subprime credit.
3. BHPH lots are an evolving species. Historically, Buy Here Pay Here dealerships have gotten a pretty bad rap...people see them as selling cheap cars, for lots of money, at high interest, and at no financial benefit to the driver.
As time has moved on, this older model of scamming people has gone away, with more BHPH dealers embracing a trend of better cars, at more reasonable rates, and with credit reporting. New car dealerships today are much like they were 30 or even 50 years ago: focused on sales, and moving cars off their lot.
4. BHPH are fountains of financial resources available in small communities across America. They serve as both bad credit bank, and used car dealership. Many new car dealerships simply won't--or can't--finance people with bad credit.
5. As BHPH dealers have evolved, many are finding that if they take extra care to work with their customers, they can avoid the costly process of reposession (AKA, "repo"). Repossessions are a costly endeavor for small, local BHPH companies, as they often don't have the capitol to invest in the extensive legal process of reclaiming a car. The fewer reposessions the better, for honest BHPH companies. New car dealerships typically have an easier time absorbing the cost of repossession (see #6, also).
6. New car dealerships can spend the money on reposession, as many of them are just franchises from a global comapny, like Ford, Chevrolet, KIA, Hyundai, etc.
7. New car dealerships want to SELL you a car. The better Buy Here Pay Here companies don't "sell" anything--and they don't have salespeople. Instead, they have some form of Finance Specialist who works with customers on a finance program.
These are just some of the ways BHPH companies differ from tradtional new car dealerships. To read more about the Buy Here Pay Here model, or get some pro-tips about buying a car, click on the tags below!