The term “Buy Here Pay Here Dealer” has been floating around in the car dealership industry. This is a method of financing an auto purchase. What exactly does Buy Here Pay Here mean?
The definition is simple. It is basically financing the car purchase through the dealership. Instead of going to the bank or a third-party lending institution to apply for an auto loan, the buyer arranges for financing right there at the dealership where he bought the car.
In-house financing of a vehicle is really nothing new because it has been around for many years. This has become more popular over the recent years because more and more people were suffering from poor credit. The downturn of the economy in the U.S. caused many people to lose jobs and become delinquent in paying their bills. They defaulted on their loans. As a result, their credit rating suffered, and lenders refused to lend them money for major purchases like cars.
That created a problem for people who needed to purchase basic transportation. It also negatively affected sales at the auto dealerships because people could not get financing to buy their cars. The dealerships saw this as an opportunity to promote in-house financing. No matter what the credit history for an individual is, the dealer worked with the buyer to help him buy the car that he needed.
BHPH Loans Are Right Through The Dealer
A big part of the Buy Here Pay Here loansis the fact that the loan does not go through a bank or a financial institution. The dealership is free to use creative ways to lend money to the buyer for the car purchase. All efforts are made to make the payments affordable to the buyer.
The dealership is accepting a level of risk when they offer BHPH financing, but they see the potential gains outweighing the risks. BHPH financing benefits the buyer with poor credit because he can get financing where other lenders refused to make him a loan. It benefits the dealership because it can boost car sales.
There is another benefit for the car buyer, and that is improvement of his credit over time. When he makes his regular payments on time, the dealership will report this positive activity to the credit bureaus. Gradually, this will have positive effect on the individual’s credit rating.
Typically, when someone goes online with someone that specializes in dealer financing like Buy Here Pay Here Seattle, the individual would first discuss his financial situation with the dealership. The dealer will review the buyer’s credit report and run some numbers. Based on the type of car that the individual wishes to purchases, the dealer will figure out how much the individual can afford and develop a payment plan. Then, he will show the vehicles that fit the criteria, and the buyer will choose among those selections. This is to ensure that the buyer is purchasing something that he can afford.
So, if you know someone who has poor credit, but who needs to buy a car, share with them Buy Here Pay Here Seattle. They are a great option for people who cannot get an auto loan anywhere else.