So you’ve heard about the Buy Here Pay Here Car Deals. They’re supposed to make car buying so easy. But is it as simple as they make it look? Or are you ready to throw your money away on a car that might not be worth it?
How it Works
Buy Here Pay Here (BHPH) car dealerships help people with bad credit or no credit to finance a vehicle purchase. Unlike traditional lending, the customer works directly with the dealership. This loan has a shorter repayment term and the highest APR possible, as the law requires.
The customer provides a down payment and agrees to make regular payments to the dealership. Some lenders will report payments to the credit bureaus, allowing the customers to rebuild their credit.
BHPH dealerships are often the last resort, and you’ll get a car quicker than through any other financing. However, you should read between the lines to avoid missing important details in the contract.
Since no credit checks are required, ‘Buy Here Pay Here’ deals are more convenient. The lenders are also willing to trade better cars with older models in bad condition.
Buy Here Pay Here car deals seem attractive on the surface. They save you time, and they don’t require any additional work on your part. However, they also have disadvantages, so you have to weigh the drawbacks carefully before signing up for these programs.
The greatest disadvantage of a BHPH car deal is a high APR. Expect to pay four to five times the average car loan interest rate on traditional auto financing. It is not surprising to find everyone approved car loans Calgary charging between 15% and 20% for cars older than three years.
The high interest is legal, and bad credit car dealerships impose them claiming that low-credit customers have no other means to finance a vehicle purchase. They can also add other fees when buyers agree to them. Such expensive rates make it harder for buyers to make timely payments.
Another drawback of BHPH deals is higher car prices. Most cars on their lots have a price exceeding the prevailing market value. In the end, you pay more than the vehicle is worth.
A no-credit-check deal doesn’t guarantee improvement in your creditworthiness. Some BHPH dealers do not report your timely monthly repayments to the credit bureaus. This means you will lose numerous opportunities to rebuild your credit score.
You should also beware of costly add-ons placed as conditions to get auto financing through a BHPH dealership. Warranties and other extras will only increase your debt.
Lastly, defaulting on a Buy Here Pay Here car loan can bring unexpected disruptions, such as having your car disabled through a remote tracking device. If your loan status becomes delinquent, you risk having it repossessed by the dealer.
If you must use BHPH as a last option, get ready to pay a huge downpayment. Also, the repayment plan could be weekly or bi-weekly instead of the regular monthly schedule. In rare circumstances, you have to pay in check or cash.
Buy Here Pay Here Car Deals are not for everyone. These types of car-buying experiences often require a more hands-on approach, especially if you are new to auto dealerships. Start with intense research if you think you need used car loan Calgary. Weigh the above pros and cons to see whether you want to get into it.
However, exploring other alternatives before searching for BHPH car deals near you is good. And remember to evaluate your credit score to know your financial standing.
Leave a Reply