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Buy Here Pay Here Auto Loans

What is a buy here pay auto loan?

Buy Here Pay Here (or BHPH) is the name for a type of bad credit financing and the dealerships that offer it. It simply means, as the name implies, that the car dealer offers in-house financing for customers with bad credit instead of through a third party bank or finance company. You BUY the car at the dealership and you PAY the loan at the dealership, hence the name Buy Here Pay Here. Many of these dealers approve auto loans with no credit checks. Instead of making monthly payments to a traditional lender, you make weekly, bi-weekly or monthly payments at the dealership.

Who should consider a buy here pay auto loan?

BHPH dealerships are mainly for people who are in need of a used car, but have had trouble getting an auto loan through traditional avenues for any of several reasons:

  • Bad Credit
  • No Credit
  • Income is Too Low
  • Unable to Prove Income
  • Self-Employed or 1099 Employees
  • Unable to Prove Residence
  • Multiple or Dismissed Bankruptcies
  • Recent or Multiple Repossessions
  • Foreclosures

  • Should a buy here pay here auto loan be my last option?

    YES, only after you have exhausted all other means of getting a bad credit auto loan. Buy Here Pay Here Financing may be your last, best option. As with any type of automotive financing, there are pros and cons to working with a BHPH Dealer:


  • Easy Financing ~ The biggest benefit of a BHPH is that it gives people with bad credit who have been turned down by other sub-prime auto loan providers the ability to get needed transportation. BHPH car dealers will finance anyone that has sufficient income to make their payments.
  • Establish Positive Credit ~ You can rebuild your credit by making timely payments on an installment loan. Consistent and timely payments on a BHPH auto loan can help improve your credit score, assuming the BHPH reports to the major credit reporting agencies. Not all BHPH Dealers report.
  • Better Trade-in Options ~ BHPH dealerships are generally more willing to accept older model and higher mileage vehicles on trade. They will usually accept trade-ins that many traditional dealerships will not.
  • Lower Down Payments ~ BHPH dealerships are also more willing to accept less money down than traditional or sub-prime lenders. Often your down payment is equal to your financed monthly payment amount.

  • CONS

  • Higher Vehicle Prices ~ There are no lenders regulating how much a BHPH dealer is charging for a vehicle. The markup at a Buy Here Pay Here Dealer is often thousands of dollars more than a similar vehicle at a regular car dealership.
  • Finance Charges ~ Finance fees and interest rates are usually a lot higher with BHPH financing. Rates generally run in the 25%-29% range.
  • Vehicle Quality ~ The vehicles offered for sale at most Buy Here Pay Here dealers are, for the most part, older higher-mileage cars and trucks that traditional auto dealerships will not sell because traditional banks and finance companies will not finance them. Most BHPH vehicles are bought at auction or are trade-ins. Many vehicles offered have been sold, repossessed, and sold again. In many cases multiple times.
  • Payment Terms ~ Unlike a traditional lender, with standard payments made monthly, you may have to make weekly or bi-weekly payments to coincide with your pay period.
  • Payment Methods ~ Some BHPH dealerships will accept payment by phone or online, but most require you to actually bring a check, cash, cashier’s check or money order physically to their location on or before the due date.
  • No Service Facilities ~ Most BHPH Dealers do not have on-site service facilities, and do not inspect, service or maintain the vehicles that they sell in any way.
  • No Warranty ~ While some BHPH Dealers offer limited warranties or will sell extended warranties, most do not. Vehicles are sold AS-IS and any major mechanical issues, repairs and expenses are the sole responsibility of the buyer.
  • No Recourse ~ If your vehicle, financing or business dealings with a BHPH go bad there is no legal recourse other than filing a lawsuit in civil court or filing a complaint with State or Federal Consumer Affairs agencies.
  • Very Limited Grace Period ~ Most BHPH financing has a very limited grace period for each payment. In other words, if you are late with your payment, late charges and collection activities will begin sooner, and could result in a very fast repossession.

  • Are there any other options?

    If you have applied with MULTIPLE Bad Credit Auto Loan options like:

  • Online Bad Credit Auto Loan Quotes
  • Traditional Banks, Finance Companies, and Auto Lenders
  • Traditional, Name Brand Automobile Dealerships

  • And have been denied credit from all of them, then Buy Here Pay Here Financing might be your only option. But before you look seriously at this option, make sure you have exhausted all other methods of financing the car or truck that you need. The negatives involved in dealing with BHPH Dealer are many and very real.

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