How Does Buy Here Pay Here Work?

Many people that have been refused car credit or turned down at a normal car dealership, think that the only way that they are going to be able to obtain financing is if they use a buy here pay here car lot. This is not the best alternative for you if you have bad credit. Let’s take a look at how buy here pay here car lots work.

The Sale Price.

Buy here pay here car lots work by charging more money for cars than normal car dealerships do. Typically they sell cars that other car lots would only be able to send to an auction. Most new car dealers do not have lenders that will finance vehicles that have over 75,000 miles on them.

When a new car dealership takes a vehicle in on trade that has more than 75,000 miles on it they typically will send us car to an auction. As there are not any new car dealerships that are competing to buy these types of cars that have high mileage an auction, buy here pay here car lots can pick up these vehicles very cheap. As buy here pay here car lots finance their own cars, there is not a lender or a loan company that is overseeing the amount of money that is being charged for the vehicle.

As many people that use these types of car lots are buying their vehicles based upon payments, rather than price along with having the desperation of needing to get a car, buy here pay here dealers can get away with charging above retail price for a vehicle. In simple terms, you will pay more for a vehicle at a buy here pay here car lot then you will at a normal dealership or through a private seller.

Finance Charges.

Each state has its own laws and regulations regarding how much interest that a pawn shop or a buy here pay here car lot can charge. In many states, the cap on interest rates is 29% interest. On average, you can generally expect to pay over 20% interest at a buy here pay here car lot. Unfortunately, many people do not know that there are other ways to obtain financing when you have very bad credit.

Down Payments.

Generally speaking, from years of experience of having been in the car business myself, buy here pay your car lots work to try to get you to put down a down payment that is nearer what the dealer actually paid for the car. In other words, what you put down for a down payment covers the majority of the cost of the car for the dealer. Then, what you pay in payments and interest charges is primarily profit. This reduces the risk that the buy here pay here dealer has in financing a car to someone that has really bad credit.

A Better Alternative.

Many people that have really bad credit and have been turned down by normal car dealerships don’t think that they are good enough or have good enough credit to be able to get a real car loan. This is why people turn to buy here pay here car lots and end up spending more money than they have to. You can get more car for less money if you simply know what to do. The problem is that many people, have no idea that there are better alternatives available to them.

Even if you have horrible credit, it is very easy to apply and to get approved for a car loan through a couple good sources on the Internet. Just like everything else, you can do just about everything on the Internet. A new car dealership is not going to tell you to run home and get on your computer to find out what the invoice cost for their car is. Neither will, a buy here car lot tell you that you can get on the Internet and get a better deal on your financing. That makes sense, doesn’t it? All businesses want to protect their profits and if customers are in the dark and don’t know that there’re other alternative options for them, then they can make more money.

My Recommendation:

If you want to save money and avoid the overpriced cars and outrages finance charges that are charged by buy here pay here car lots, you can easily work out a deal with an online lender that will provide you with a car loan, even with disasters on your credit report. It is much easier than you think.



Source by Jason Lanier

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