You may have heard of a Buy Here Pay Here program, but what exactly do these programs
entail, and are they right for you? Read on to learn more about Buy Here Pay Here and see if
this is the best way to finance your next vehicle.
Understanding Buy Here Pay Here Dealerships
Buy Here Pay Here dealerships (or BHPH) offer car buyers in-house financing solutions for
available vehicles. Unlike securing an auto loan from a bank or third-party lender, buyers secure
their loan from the dealership itself.
For many car buyers, it can be difficult to get an auto loan if you have less than ideal credit or
none at all. For these buyers, BHPH programs can be a great solution to help drivers get into a
great vehicle with a financing plan that works for them.
Why Use a Buy Here Pay Here Dealership?
For drivers who need to purchase a vehicle but don’t have good credit or any credit at all, a
BHPH dealership can be a good option.
Along with easier access to a car loan, these types of dealerships help simplify the auto loan
process. Because the loan is drawn up in-house, there’s often much less paperwork involved.
Buyers also have a more detailed and thorough understanding of the loan they’re taking out
because they’re working with their loan originator first-hand.
If you do enter into a Buy Here Pay Here contract, keeping up with regular payments can help
improve your credit score. In turn, this will help you build up your financial reputation, which
allows you to avoid these financing plans later on down the road.
Cons of a Buy Here Pay Here Program
With this specialized program, there are some drawbacks shoppers should be aware of. For
starters, because drivers are financing in-house, borrowers typically experience higher interest
rates on the loans they take out. Additionally, depending on the dealership, you may also be
responsible for additional fees that you won’t find with a traditional auto loan lender.
Depending on your budget, you may also be limited in the selection of vehicles you can shop
from. Unlike a traditional dealership, where you simply pick out your car and then move forward
with financing, BHPH dealerships use almost a reverse approach.
These specialized dealerships will help you calculate how much you qualify for, and then they’ll
offer you a selection of vehicles that fit within that budget. As a basic rule, the fewer funds you
have available, the more limited your selection will be.
Finally, because of the nature of BHPH programs, there tend to be much higher repossession
rates than traditional auto buying methods. This is largely due to stricter contract terms and little
leeway for negotiating payments.
It’s important to understand these cons thoroughly so that you make the best decision for your
circumstances.
Do Buy Here, Pay Here Dealerships Affect My Credit Score?
A reputable dealership that specializes in BHPH will report your monthly payment to all three
credit reporting agencies. If you are consistent with your payment, this can help to improve your
credit score. On the contrary, missing payments can have a negative impact on your credit
score as well.
The Bottom Line
Since their introduction, Buy Here Pay Here programs have helped allow drivers with poor or
bad credit to get into a vehicle they love. With proper planning, consistency in payments, and
the right dealership, this may be a great program for you and your family.
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