The buy here pay here car lots should be considered as a last resort for an auto financing source and it is for those people that do not have any other options. In order to be prepared for such a transaction, you will need to ask the dealer a couple of questions.
The first one would have to be “What do I need to bring when I come to the auto dealership?” Bringing the appropriate documents to such a BHPH dealer can speed up the transaction process. Despite the fact that the list for necessary documents can vary depending on the situation of your credit score and each dealer, here are a couple of things that you will most likely need: driver’s license, proof of auto insurance, financial info, social security number, references along with contact info, proof of employment and salary, proof of residence, current phone bill and of course, money for a down payment.
You will certainly want to know their preferred methods of payment so you should ask them the following question: “How do you accept / prefer the payment?” To a traditional lender you will make monthly payments but to BHPH lots you will make either weekly or bi-weekly payments. Many of these dealers will ask you to bring cash to their location, but lately some of them have started to expand their methods for accepting payments. You should ask the dealer if he takes payment online or by phone. If you have a current checking account, credit card or a savings account, some of the dealers might require an automatic withdrawal. Other dealers prefer accepting money through money orders.
The third question that you will have to ask them is: “What is the policy regarding late payments?” You will certainly want to know all the relevant information about the dealer’s late-payment policy. Some of them will repossess the vehicle right after you have failed to make a payment while others will give you a grace period. You need to know if they will contact you or they will simply take the vehicle back without notifying you. The latter is a rare situation but it could happen and for this reason it would be best to know if something goes wrong and you cannot make the payments on time. You could also ask the BHPH dealer if he reports both the positive and negative payment info to the credit reporting agencies.
The location of the buy here pay here car lots is very important so you should ask them: “Where are your offices? It is recommended to select one that is close to where you work or where you live so that it will be convenient for you to drop by and give them the money. These dealers prefer to conduct business with those customers that live in the near vicinity of their office so that it is easy to maintain the financial agreement geographically.
The last question you should ask them would be the following: “What value do you place on offering quality cars?” Many of these BHPH dealers orient their business at offering reliable cars. They are fully aware of the fact that in order to keep you faithful to the payment plan, they will need to give you a car that will not cause any problems. You will need to ask these dealers about the inspections of the cars of if they have undergone a reconditioning process. Check out if they offer repairs and maintenance onsite or if they have a business associate that can provide these services.
If you haven’t decided yet to go down this road, here are the main advantages and disadvantage of purchasing a car through a BHPH dealer. Let’s start with the advantages:
If you are looking for a car but you do not have a good credit score, these dealers can be the only option for you, after most likely you have been turned down by the regular loaning institutions. The second advantage would be that both the cars and the credit are located in the same place which means that you will get what you need with a minimum waste of time and fuss.
Many of these dealers will offer better trade-in options as they have the tendency to be more forgiving when you want to trade-in an older model car. The BHPH dealers fully understand the value of the vehicle and benefit of getting long-term use out of cars, a concept that you will not find so frequently on traditional car dealerships.
If you have a bad credit, buying through a BHPH dealer would be a great way to improve your score. If you will make all the payments on time, many of these dealers will report your good behavior to the agencies that deal with credit reporting and as a consequence, your credit score will improve. However, not all of them do this and it is best to find this out before signing a deal.
We have covered the advantages, here are the drawbacks of these buy here pay here car lots:
Unlike the traditional financing, most of these dealers will ask you to bring a check or even cash for the down payment. As mentioned before, some of the companies will not report that you have made the payments on time, because you will be paying directly to them and not to a finance company, meaning that your behavior will not be reported. Probably the most significant disadvantage with these dealers is that you will be paying more in the long run. Why? Because these BHPH dealers have their own financing system and can dictate their own rates and rules, which are not regulated in any way by a financial institution. There is no fixed interest rate as it depends on the personal situation of each customer. However, being a high risk loan, the interest rates could be as high as 20%, even more in some situations.
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