Why You Should Avoid Buy Here Pay Here Car Lots
A negative credit score will wreak havoc on your ability to do many things. Chief among them is buying a car or other big ticket item. The joke is that it is easier to buy a house with bad credit than it is a car, because houses don't move, but cars can be hidden from the repo man for weeks or even months.
In the past, bad credit meant that most traditional dealerships would not be able to secure financing for a home loan. In most cases the only option for these people was the buy here pay here lots that are found on virtually every corner in every town. BHPH lots are set up where you buy your car and make your payments to the dealer (usually in person, usually in cash, and usually for a very high interest rate).
While there are many benefits to purchasing from a BHPH lot, namely the ability to get a car even with less than stellar credit, there are certain drawbacks to the process. Many of these are unavoidable, but in the interest of full disclosure;
Forget having a rewarding car buying experience. Most folks enjoy the process of finding the car they really like and then working out the finances. With BHPH lots, this process is reversed. Your financial situation is evaluated first and then you are shown the cars that you can buy. It is not exactly a process that places a lot of value on the wishes of the buyer.
In addition, the stereotypical image of a car salesman, with bad fashion sense, oily hair, and fake charm is usually found at many buy here pay here lots. In many cases you won't find the same level of professionalism that you would at say, a Cadillac store.
You're also limited to the selection of vehicles that are found on the lot at that moment. The notion of specifying a vehicle for the dealer to locate and bring in for you does not apply in the buy her pay here world.
The cars you are looking at will in all likelihood not be late model, low mileage options. Many BHPH lots carry older models, often with more than one hundred thousand miles on them. Mechanical issues such as transmissions or head gaskets may be suspect.
Expect to pay through the nose on interest charges. BHPH lots feel (many times rightly so) that they are taking a chance by selling cars to folks with questionable credit. They protect some of their investment by ratcheting up the interest rates.
Expect to pay on a weekly basis, taking time out of your busy schedule to do so. BHPH lots like to see their money every week, preferably in cash, so they know things are being paid for on time. Some dealers will even equip their cars with a timer, which shuts off the engine on a given day if the payment is not met. Making your payment gets the timer reset for another week, or two weeks, or month, or whatever your arrangement is. Many dealers may also install Lo-Jack in order to keep track of where the vehicle is at all times.
In addition, don't expect that buying a car from a buy here pay here lot will help your credit score. Many dealerships do not report transactions to the three major credit reporting agencies. If you are working with a BHPH lot, ask if they report payment records to Equifax, Experian, or TransUnion. If they do not, look elsewhere.
If you are attracted to a buy here pay here lot because of the low sticker price on a given car, forget it. These outfits are not interested in cash deals. They make most of their money on the high interest rates, so selling a car for cash is basically a losing proposition for them.
Buy here pay here lots are many times the only option for folks with questionable credit, which can be discouraging. It would be frustrating for anybody to know that they only have one option, an option that affords them less desirable vehicles and inflated interest rates.
On the plus side, there are some reputable buy here pay here lots. You just need to be diligent, do your homework, and select the one that has a good reputation and places a measure of value on their customers.
Questions and Answers
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