What is Buy Here Pay Here Financing?
The “Buy Here Pay Here” car lot is common in the USA, where credit can be found for vehicle purchases to people who cannot buy a car through the more usual channels. Buy Here Pay Here (BHPH) financing means that you arrange a loan through the dealership itself, rather than negotiating a loan with a bank or third party loan company.
The key difference between a traditional dealership and one that specializes strictly in BHPH financing lies in the shopping experience. At a traditional dealership, the financial conversation is often the last part of your discussion. After you’ve seen a few models, asked a host of car questions and possibly test driven one, the dealer will help you explore payment options.
At a BHPH dealership, the sales process is usually the reversed of a standard dealership. The discussion of payment options comes after you have chosen a vehicle and maybe taken a test drive. At a BHPH Car Lot the dealer will first establish the credit line before showing you vehicles. Then, with your monthly payment and down payment information arranged, the dealer will show you cars that are available to you based on that financial information.
The Benefits of BHPH car financing
Available Credit: If you need transport but do not have a good credit rating BHPH dealerships may be the only option for someone who has been turned down by traditional loan companies.
Cars and Credit in the same place: both choosing a car and putting the financial planning in place can be achieved in the same establishment, with the minimum of wasted time or fuss.
Better trade-in options: BHPH dealerships tend to be more forgiving when it comes to accepting trade-ins on older model cars. These types of dealerships understand the value and benefit of getting long-term use out of cars that many traditional dealerships would not accept. Dealing, as they do, with those who cannot find cars at more traditional dealerships, they are more likely to find a buyer for your used car and therefore more likely to accept it as part of a trade-in deal.
Opportunities to improve credit: Assuming that ne of the reasons you are using a BHPH dealer is that your credit rating is not good, buying here may be one of the ways to rebuild start rebuilding credit history. If you consistently make payments on a BHPH car loan, many dealers will report that positive behavior to the credit reporting agencies thereby improving your credit score. There is a caveat to this: not all BHPH dealers report your details to the credit institutions. Make sure you ask the dealership if reporting is a policy they follow before closing a deal.
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Source: BHPH Car Lots Financing