What is Buy Here Pay Here Financing 

Traditional auto financing is when your purchase is paid in full to the dealership by a finance company and you pay the finance company in installments. Buy Here Pay Here financing is when the dealership is the finance company as well as the seller. Both instances you don’t own the vehicle in full until the finance company either changes the title over to you or removes the lien.

Buy Here Pay Here Financing is typically done when the purchaser does not have credit history, has bad credit, or the vehicle does not fit the requirements of finance companies. Financial companies won’t typically give loans to someone without credit history. Having a credit card for over 5 years and having a loan, in good standing or paid off, for a furniture purchase would be an example of good credit history. Having bad credit is fine for most buy here pay here dealerships as they are the finance company and are willing to take the risk for vehicles that usually won’t qualify for bank financing due to age or low value.

Payments for a buy here pay here purchase are also different than traditional financing. There usually is a down payment requirement with a buy here pay here purchase.  Down payment varies depending on dealerships, some will have a flat rate such as $500 down and others will vary the down payment based on price of the vehicle. If you have great credit, finance companies sometimes require no down payment, however depending on credit history and credit score the down payment requirement could be higher than a buy here pay here purchase.  Payments for a buy here pay here purchase are frequently on a weekly or biweekly schedule rather than a monthly one, however they usually add up to a lower amount than the traditional monthly payment amount.

Pros

• No credit or bad credit OK
• Financing not limited by vehicle age or low value
• Could be lower down payment
• Repairs bad credit
• Lower Payments

Cons

• Payments due more frequently
• Typically higher interest rates