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Buy Here Pay Here Dealerships

Purchasing a car is essential to most people’s lives, but you may have difficulty obtaining financing if you have poor credit or no credit history. Many car dealerships offer buy here pay here (BHPH) financing, which is a form of in-house auto loan financing that doesn’t involve a third-party lender. While BHPH loans might help you purchase a vehicle, these loans typically come with higher interest rates than those provided by traditional lenders, according to the Consumer Financial Protection Bureau. They also might not report on-time payments to the three major credit bureaus, Experian, Equifax and TransUnion, which can negatively impact your credit score. Learn more :

Is hire purchase just for cars?

During the car-buying process, you might be offered a BHPH loan by the dealer that sells you your vehicle, or by a third-party lender with which the dealer has an agreement. In most cases, the dealer will run your credit and ask for proof of income before approving you for financing. However, if you are buying your car from a BHPH dealer and have no or poor credit, the dealer might not run your credit at all.

If you’re approved for a loan, the dealership will likely require that you make a down payment and sign a contract. If you’re unable to make your payments, the dealership might repossess your vehicle. Some dealers use tracking devices and shut-off switches to make the repossession process easier, while others might have a more complicated process for retrieving your car.

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