Car Buying

What Is Buy Here Pay Here?

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author photo by Russ Heaps September 2014

If you've found that every other credit avenue for financing a car is closed to you, a Buy Here Pay Here (BHPH) dealer may be your last, and best, resort.

Most of us simply can't afford to buy a car with cash. Typically, we borrow money for a car through third-party lenders, such as banks, credit unions and carmaker-associated lending companies.

For a variety of reasons, however (such as a spotty credit history, no credit or a very low credit score), traditional lenders may not work for you. If that's the case, there are always BHPH dealers.

What Is Buy Here Pay Here Financing?

BHPH financing means that you arrange the loan and make payments on it at the dealership where you purchased the car. In other words, it's a one-stop shopping process because the car dealer is also the finance company.

Because loan decisions are made by the BHPH dealer, who wants to sell you a car, approval is nearly always guaranteed. If you have an address and a steady income, your chances for approval are very good.

Granting you a loan, however, isn't out of the goodness of the dealer's heart; they will probably make as much, or more, profit on the financing as they do on the car itself. As a high-risk borrower, you can expect a double-digit interest rate.

It's helpful to find a dealer close to your home or work because, rather than mailing a monthly payment, the BHPH dealer might require you to make weekly or biweekly trips to the dealership to pay in person. Although some will accept payment online or by mail or phone, BHPH usually means physically bringing your payment to the dealership.

Differences Between BHPH Dealerships and Traditional Dealerships

Lately, the lines separating a more traditional dealership and one offering BHPH have become blurred. Some traditional new- and used-car dealerships now offer BHPH financing as an option. You might not see "Buy Here Pay Here" written across the windshields of the cars, but phrases such as "We Finance" are usually code for BHPH.

If you're having trouble getting traditional financing, start with the used-car lot at a franchised dealership, such as Chevrolet or Dodge, that advertises easy financing or rebuilding credit.

The bad news is that BHPH turns the car-shopping experience upside down. Rather than settling on a car and then talking financing, a BHPH dealer will first qualify the customer before determining how much they're willing to lend. Finally, the dealer will show the customer which cars are options to buy, and choices will probably be limited.

With BHPH, always ask about the late payment policy. Is there a grace period, and if so, how long is it? Make sure that the contract clearly spells out how long the period is between missing one of those weekly payments and repossession.

Who Should Go to a BHPH Dealership?

Your credit may well be better than you think. Always go to traditional lenders first: banks, credit unions and even finance companies. Only when every one of them has denied you should you revert to a BHPH dealer.

Benefits of BHPH

  • They put credit-challenged borrowers in a car when a traditional lender will not.
  • On-time payments can help repair your credit history (but be sure that the BHPH dealer reports payment histories to the credit bureau).
  • They buy older cars and will be more willing to take in an old beater toward the down payment of a new car.

What it means to you: When every traditional lender turns you down, Buy Here Pay Here dealers can help put you behind the wheel. If you think Buy Here, Pay Here is a good fit for you can your circumstance, check out our Buy Here, Pay Here page that list specific dealers and cars that are available with BHPH financing.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
What Is Buy Here Pay Here? - Autotrader