The ultimate Guide to
Buy Here Pay Here

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If you’re reading this, then the chances are high that you’ve been turned down for an auto loan through a traditional lending institution. Thankfully, there is help for you to get a car loan without breaking the bank. A buy here pay here dealership affords you the opportunity to not only get a car loan quickly and easily, but rebuild your credit in the process.

If you have bad credit or no credit at all, these dealerships exist to help you get a reliable vehicle directly through the dealership’s in-house financing. You won’t have to go through another disappointing rejection because the representatives at these dealers will work hard to get you approved for financing based on your employment status and residency.

1
Definition of Buy Here Pay Here

Buy here pay here dealers extend financing to consumers directly through the dealership – as a one-stop, all inclusive solution. If you have bad credit and have gotten turned down, the reps at a buy here pay here dealer will not refuse you based on your credit past. They will put forth every effort to analyze your financial situation as a whole and try to get you approved for an auto loan. If you don’t want to withstand another rejection from a bank or lending institution because of your poor credit history, it’s time to find out what a buy here pay here dealership can do for you.

With other lenders, you obtain financing through a bank and pay them, but with a buy here pay here dealership, the process is smooth and easy. You simply test drive a car that you like, apply for financing and then make your payments at the dealership directly. These dealerships want to see you in a car so that you can continue working and making your payments while building up your credit. In order to approve financing, dealerships who offer in-house financing don’t typically look at your credit in making a determination on whether or not to extend credit to you. They listen to you and look at the entire picture before making any credit decisions and you can get approval the same day if you meet their conditions.

Buy here pay here dealerships make all of the arrangements for the loan and give you a central location of which you can pay your payments

It is basically a one-stop solution for purchasing a used car. If you have a stable job with steady income and a residence, then obtaining dealer financing is nearly guaranteed. These dealers will work with you to get you in a reliable car with an affordable payment plan that is geared to your financial situation. You may be requested to make weekly, bi-weekly or monthly payments, but all of the information will be included in the loan contract that you’ll sign.

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With help from ApproveNow, you can find the best Buy Here Pay Here dealership in your area.
Your job serves as your credit check, and a paycheck is all you need to demonstrate an ability to meet financing requirements. For as little as $299 down, you can secure the car you’ve been searching for.
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2
History of Buy Here Pay Here

In the 1970s, the savings and loan crisis erupted, causing the need for the emergence of buy here pay here dealerships. During the crisis, credit was harder to get for consumers and the number of unemployed people hit a record high. While the economy began transforming from production based to service based, there was a need for people to get back and forth to work. Unfortunately, with credit harder to obtain, it presented a problem for unemployed people. To combat the need to help hard working people get into cars so they could work, the buy here pay here industry was born. During this time, no one had the means to walk into a car dealership and pay out cash for a car, so dealerships had to find a way to get good people in their vehicles.

As a solution, dealerships offered financing through a Related Finance Company (RFC) that would approve customers whose credit wasn’t excellent. With this model, the dealerships could make sales and approve loans themselves.

The consumers would be happy getting financing for a car that they would otherwise not be able to have

In 2008, many other lending companies have offered financing options, thus decreasing the down payment needed for buy here pay here dealerships. In order to remain competitive in the market, these dealerships have lowered their requirements for down payments, thus giving them the opportunity to open up dealer financing to even more consumers.

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3
4 Huge Benefits You Didn’t Think Of

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4
How It Works

If you’ve been turned down for a car loan by a traditional lender, then you know that your credit history is less than perfect. Fortunately, there is help for consumers like you who find themselves in need of a vehicle and have a low credit score.

When seeking approval for a car loan through a buy here pay here dealership, you will need to come prepared.

When you apply for a car loan, bring a few copies of your pay stubs along with references, your driver’s license, a utility bill and some references

The dealer representative will run your credit report and determine how much credit they are willing to extend to you based on your entire financial picture. At that time, you are free to peruse the selection of reliable vehicles on the lot and select one that meets your needs. Afterward, driving off of the lot is easy and pain free as soon as you sign the loan documents.

Your job is your credit with dealerships that offer in-house financing and these dealers are very familiar with dealing with subprime consumers. So, they know the best avenues in getting you approved if your credit situation is lacking. When you pay your payments on time every month, your good payment history gets reported to the credit reporting agencies, so that you are working toward rebuilding your credit.

Buy here pay here dealerships will take your weekly, bi-weekly or monthly payments directly at the dealership, in person. When you obtain financing using this method, you can discuss the financial aspect of the car buying experience right when you walk in the door of the dealership. The reps working at these dealers are familiar with helping those who are in similar situations and will work their hardest to get you financed for the vehicle you want.

The representative will listen to your financial situation and can qualify you for any number of affordable and reliable vehicles

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5
The Application Process

Through many dealer-controlled financing solutions, you may be able to apply for preapproval before you even leave the house. Sign up on the dealer’s website and you could be contacted by a specialist who is assigned to help you get financing. At this time, you will be scheduled for a test drive if you meet the conditions for approval.

All you really need to get started is a steady job with reliable income, a stable residence, a valid driver’s license, proof of insurance and a list of friends or family members that will vouch for you

Just because your credit situation isn’t excellent, it doesn’t mean that you deserve to be treated differently than someone with great credit. The dealerships that offer in-house financing want to help you get into a reliable vehicle with a payment that you can afford. Walk into a dealership today and discuss your situation so that you can obtain approval on a well maintained vehicle.

Despite being turned down in the past, you can still get auto loan financing

Your poor credit situation no longer has to keep you from being able to own a quality vehicle. Applying is easy and you could be driving off of the lot with a great car the same day.

If you have a good job and have proof of residence, then there isn’t anything holding you back from being on your way to buying a nice car that will fit right into your budget. You can’t be turned down because of your credit, so begin the process today. Applying is as easy as going into the dealership and talking with one of their qualified representatives. The representative will ask to see your proof of residence (usually a utility bill will do), pay stubs, driver’s license, insurance information and references before making a loan decision.

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With help from ApproveNow, you can find the best suited Buy Here Pay Here dealership for you.
Your job serves as your credit check, and a paycheck is all you need to demonstrate an ability to meet financing requirements. For as little as $299 down, you can secure the car you’ve been searching for.
Apply in 60 seconds

6
Down Payments and How They Are Calculated

After making the decision to seek financing through a dealership, you should take all of the necessary documentation with you to the lot. More than likely, you will need a sizeable down payment in order to get the ball rolling with financing. This is not uncommon and a higher down payment can lessen the amount of payments throughout the course of the loan.

In order to get a good idea of what the terms of your bad credit car loan will be, you can use an auto loan calculator to gauge payment amounts.

The recommended amount to put down as a down payment on a car is typically 20 percent of the entire amount of the loan that you’re requesting

Using a down payment calculator, you can see how putting more money down will help you during the longer term course of the loan.

If you can afford a higher down payment, it is in your best interests to do so in order to lower your weekly, bi-weekly or monthly payments. Subprime dealerships will also take into account the amount of any trade-ins toward your down payment if you’re considering selling your old vehicle. If you have poor credit, you should consider placing a larger down payment up front in order to get the best deal possible.

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7
States’ Laws

A common misconception is that the buy here pay here industry as a whole is not subject to rules and regulations that provide protections to consumers. Buy here pay here dealers aren’t subject to the same regulations as banks by the Federal Reserve, but rather by state. These rules offer the consumer protections with reference to maximum interest rates, late fee charges and grace periods.

Dealerships that fall under the buy here pay here umbrella have a plethora of laws in which they are required to comply. These consist of State and Federal Unfair & Deceptive Practices, State Usury laws, the Truth in Lending Act, the Fair & Accurate Credit Transaction Act, the Used Car Rule, the Privacy Rule, the Safeguards Rule, the Disposal Rule, the Red Flags Rule, the Risk Based Pricing Rule and the Fair Debt Collections Practices Act.
These rules and laws work to prevent identity theft, provide buyer’s guides for used vehicles that offer warranty information and give consumers full disclosure on the terms of any loan agreements. Many of these laws are governed by the Federal Trade Commission and offer extended protections to consumers.

Approve Now rules and laws for the buy here pay here industry

The bottom line is that you are protected by a great deal of laws when you go into a dealership to secure financing for a car loan.

You can walk into a dealership feeling secure that there are protections in place for consumers to get financing without any hassle
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A buy here pay here dealership affords you the opportunity to not only get a car loan quickly and easily, but rebuild your credit in the process. At Approve Now we can help you find the best Buy Here Pay Here dealer in your area.

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8
Obtaining Financing with a Bankruptcy

Chances are, if you’ve filed for bankruptcy, then you were probably at the end of your financial rope. If you were overwhelmed by debts, then you felt it was the only way out of a tight spot that seemed hopeless. Many traditional lenders view consumers who have filed for bankruptcy as a risk that they don’t wish to take on. What they don’t understand is that even if you’ve filed for bankruptcy, you still need to be able to get back and forth to your place of employment. If you have a steady source of income, even a bankruptcy filing should not keep you from being able to get a car loan. You can still get financing despite any negative marks on your credit history.

Regardless of your credit situation, if you have a stable residence and steady income, then your chances of getting approval are greater

A bankruptcy filing is an indication of your poor credit past, but you want to look toward the future with a car loan. In doing so, you need to connect with a dealership that won’t take any negative marks on your credit report against you.

While dealerships that offer in-house financing will usually run your credit report, they will usually guarantee approval if you’re working and can prove it. Your job is your credit and these dealerships will work hard to get you into a reliable vehicle as long as their conditions are met.

Your best chance for obtaining auto loan financing with a bankruptcy on your record is to apply following your bankruptcy discharge date. To be completely sure that you are able to obtain auto loan financing while involved in a bankruptcy petition, consult with your attorney. If your bankruptcy has been discharged, bring proof of this with you to the dealership. Many dealers don’t have access to PACER (an online bankruptcy checking system) and cannot verify discharges without proper documentation.

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9
Who Should Use Buy Here Pay Here Financing

If you have attempted to apply for financing through traditional lenders and dealerships, then you should look into receiving financing through a subprime lender. Because these dealerships arrange for the loan and finance it for you, you are almost always guaranteed to receive approval.
If you’re like most people, you can’t afford to walk into a dealership and pay cash outright for the vehicle of your choosing. That’s why financing was invented – to help good people like you who work hard get into cars.

Your job is your credit with a buy here pay here dealer

If your credit history is lacking or poor, then this avenue is a great way to obtain financing for a well maintained vehicle. Why not work with a company that is on your side? Your credit report only tells part of the story of your credit history, but when you sit down with a qualified professional, they will listen to your side of the story and work with you to get you financed for a car loan.

If you’ve had trouble getting financing through conventional means, your only option may be to seek financing through a buy here pay here dealership. These dealerships are used to working with consumers in bad credit situations and will work to get you approved for a vehicle that is reliable and affordable based on your financial situation.

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10
Differences between BHPH vs. Traditional Financing

Traditional lending institutions cater to consumers with excellent credit and will provide lower interest rates based on a person’s credit score. These institutions will reject your application for credit if your credit score is considered subprime (below 550). They only want the cream of the crop when it comes to selling new and used vehicles and will send you a letter within 30 days telling you exactly why they turned you down. Instead of waiting around for that letter, you could be walking in the doors of a buy here pay here lender that will take your entire financial situation into account before working with you to get a car loan. These dealers finance your vehicle purchase themselves, so they are more invested in getting you approved for financing.

Dealerships that want to provide you with financing are used to the risk involved in dealing with subprime borrowers and they have tailor made programs that can work for you.

Just walk into the dealership and discuss your personal situation with one of their representatives and you could be on your way to getting financing

When you talk with a dealer representative, you can rest assured that they are on your side when it comes to helping you get behind the wheel of a reliable car. You are able to peruse the selection of vehicles and choose a car to test drive. When you’re all done, you can sign the loan documents and take pride in the fact that you are working to rebuild your credit situation.

Buy here pay here dealerships open their doors to anyone who finds themselves in need of a vehicle to get back and forth to work. Why even put yourself through another emotional rejection at the hands of a traditional lender when you can work toward obtaining credit?

In more recent times, some dealerships offer auto loan solutions for both excellent and poor credit situations. When at a dealership, look for signs that say “we offer financing” or something similar for a cue if they can provide financing if your credit situation is less than perfect.

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Why even put yourself through another emotional rejection at the hands of a traditional lender when you can work toward obtaining credit?
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11
Dealer Add-ons

Warranties

At many buy here pay here dealerships, you won’t be left to your own devices should something happen to your car during the term of your auto loan. If you’ve chosen to get a warranty on the car, then you need to be sure of what it covers and how much the deductible is. More and more dealers these days are offering some kind of warranty along with an extended service contract for the vehicle you’ve financed through them.

If you have a warranty on your vehicle, you may take it back to the dealership in order to have repairs done on the covered parts. In order to remain competitive in a sea of subprime dealers, many buy here pay here lots offer warranties to protect their customers in the event something should break down in the car.

In this industry, it is a common belief that when the vehicle stops running for any reason, the customer stops paying their payments. No one wants to continue paying for a car that doesn’t work, so it’s best to ensure your car has some sort of coverage before signing the final paper work [6].

No matter how reliable your car is, there is a good chance that at some point or another, something will happen to cause it to break down. This is unpredictable, but with a warranty, you don’t have to pay for hefty repair bills. An extended warranty can lessen the costs of the repairs and have you paying a small deductible instead

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VIN Etching

This is a special process that dealerships provide to offer an added layer of protection to those seeking new or used cars. VIN Etching serves as an anti-theft device in that your vehicle’s VIN is etched into the corner of each of the windows. The etching provides police officers with the ability identify the vehicle as stolen and can provide an insurance discount to those who utilize the service.

GAP Insurance

GAP Insurance is optional coverage that can cover the leftover costs in case you get into an accident and the vehicle is considered a total loss. Your insurance company may not pay off the entire amount of what you owe on the loan, so the remainder is left under your responsibility.

Car Alarms

Car alarms can provide a theft deterrent to those who would consider stealing your vehicle. If you live in an area that has a high rate of crime, a car alarm can alert you in the event someone attempts to steal your car.

Lo-Jack

Another tool to prevent theft is a tracking device called Lo-Jack. This product is offered by some dealerships and it allows law enforcement officials to track your vehicle for recovery in the event it has been stolen. Lo-Jack boasts a high rate of recovery, but can be expensive.

All in all, if you wish to keep your payments to the dealership lower, you may want to consider forgoing some or most of these dealer add-ons. If you are considering purchasing any dealer add-ons, do your research ahead of time to make sure that it is a sound decision based on your financial situation. You should also know your options when it comes to getting a good deal on any of the items listed above.
When buying a used car, it is recommended to have a warranty or extended warranty in place so that you will only have to pay a small deductible. Auto repairs can be expensive and it is worth it to take care of problems as they arise. If your financial situation is tight, you may not be able to afford repairs on your vehicle, making it a great move to have a warranty in place.

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12
Why You Might Get Rejected At a Buy Here Pay Here

You may get rejected at a buy here pay here dealership if you are unable to provide proof of your working situation, residential requirements or references. These dealerships may look at your credit report, but they don’t usually use the information contained therein when making a credit approval decision.

Buy here pay here dealerships are used to working with consumers who have poor credit histories, so they are well versed in how to aid you in obtaining a used car loan.

You may be rejected for an auto loan if you aren’t working or cannot provide proof that you’re able to repay the proposed payments for the term of the loan.

In addition, if you do not possess insurance, your application for a loan through a dealer-financed company will be rejected. You must be able to bind coverage on a vehicle before you are able to legally drive it off of the lot. Insurance is a requirement in case anything happens to the vehicle, so that both you and the dealership are protected. In the event of an accident, your liability is reduced with full coverage on the car. Most financing companies, whether traditional or not, require you to have full coverage on any vehicle that you wish to finance.

Lastly, you can be rejected if you do not provide proof that you are a licensed driver. Dealerships will do their best to provide you with a quality used car if all of the conditions are met, but will not bend or break the law in order to provide you with auto financing.

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13
What You Don’t Know About Grace Periods

Some dealerships offer a window of dates in which you are able to make your payments. However, others will want your payment on the due date with no questions asked. It is best to refer to the original contract in order to determine the dealership’s leniency with regard to past due payments.

In reality, no one wants to be late in making their payments, but things do come up. It is a good practice to inform the dealership ahead of time if you think you might end up being late on your payments.

Late or missed payments could result in extra fees on top of your payments

In addition, late or missed payments can also lead to the repossession of the vehicle. The practice of adding late fees and placing cars out for repossession is not limited to buy here pay here dealerships. Most, if not all, traditional lenders have provisions in place within your loan contract if you fall into default. It is always a good practice to read over your contractual obligations before signing the loan documents. This helps you avoid confusion in the long run if a late payment occurs.

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14
Repossessions

Believe it or not, it is a lot of trouble for any lender to place a vehicle out for repossession. No matter if you’ve financed your vehicle through a traditional lender or a subprime dealership; these companies make money when you make your payments before their due dates.

With traditional and subprime auto loans, there is always a provision within the contract stating the consequences you face if you default on the terms of the loan contract. These companies want to keep you in a car and don’t want to repossess it for any reason. However, to be sure of the dealership’s policy with regard to when they will put your vehicle out for repossession, you should refer to the terms of the loan contract.

If your car does end up getting repossessed, the dealer may choose to put it back on the lot for sale again. Dealerships don’t set out to resell the same vehicle over and over and they have an end goal of keeping you in the car for the entire length of the loan.

As a last result, dealerships will commission the use of a recovery or towing company to retake possession of the vehicle with or without notice to you. As such, lenders who seek repossession as a legal remedy must inform local police of their intent to repossess within a specific time frame.

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15
Frequently Asked Questions

In order to get approved, you should bring two or more pay stubs, a copy of your utility bill (to establish residence) and between six and ten references. In addition, you will need to bring your valid driver’s license, proof of insurance and your down payment amount.
The dealership will likely pull your credit report when you attempt to obtain financing, but they will usually not turn you down for a poor credit history.
A bankruptcy or repossession on your credit report is an indication of your past dealings with creditors, but it should not prohibit you from obtaining future credit. As long as the repossession isn’t recent or the bankruptcy has been discharged, you should have no problem in obtaining a loan contract for a quality used vehicle.

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16
Questions to Ask the Dealership

If you wish to pay off your loan ahead of the maturity date, many dealerships will not have a problem with this. However, you should consult the terms of your contract to ensure there isn’t anything mentioned about a pre-payment penalty.
In order to receive financing at a buy here pay here dealership, you typically will not need to have a co-signer. Most dealerships who work with subprime lending know that your credit situation is poor or lacking completely and they have plans in place to aid you in obtaining loan financing.
As long as the bankruptcy has been discharged, you should be able to get financed through a buy here pay here dealer. This varies from dealer to dealer, so be sure to ask when you’re attempting to obtain financing.
Many dealerships will set a due date, but won’t typically provide a grace period in which you should make your payments. Always ask the dealer and read the terms of the contract to know for sure.
Young people trying to build credit for the first time can obtain an auto loan through a buy here pay here dealership. While traditional lenders will usually ask for a co-signer, subprime lenders can offer approval as long as the required conditions are met.
As long as all of the conditions are met, you should be able to drive off of the lot in a reliable car the same day. However, do not drive off of the lot without having signed the final loan documentation – otherwise you open yourself up to changes that the dealer can make to the contract without your consent.
You want to keep the term of the loan as short as possible, so be sure to ask what your payments will be with a length of 36, 48 or 60 months. Make sure that you can afford the payments for the entire length of the loan.
Many dealerships that offer in-house financing want you to make all of your payments in person. However, you should ask if they offer you the ability to mail in your payments or pay them online. Some dealerships will only accept cash or money orders, so ask the dealer representative how you can pay to avoid future confusion.
You should know what the dealer’s policy is with regard to late payments so that you don’t have to worry that they’re going to repossess the car if you’re a day late making your payment. Ask whether or not the dealership will reach out to you before taking action in the case of a missed or late payment.

Hopefully this will never be an issue, but in the event of an emergency, you should know what your options are and if the dealership is open to negotiations before repossessing the car.

In order to work on rebuilding your credit, you should utilize the services of a buy here pay here dealership that will report your regular, on-time payments to TransUnion, Equifax and Experian. While you’re making your payments, you can improve your credit score for your next vehicle purchase. If you’re paying a higher interest rate for any length of time because of bad credit, then it can only help to improve that along the way.
Some dealerships do this in order to ensure that you won’t skip off with their vehicle and not pay your payments as agreed. Dealers who do this want to know where the vehicle is at all times so that they can repossess it if needed.

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Chances are, if your vehicle has been repossessed, the dealer is going to add those charges on top of the debt you already owe them. Many recovery companies charge creditors a couple hundred dollars in order to hook the car and take it back to the lot, so you should take that into account when making your payments.

In the event that your vehicle is repossessed, the dealer is not obligated to allow you to resume your contract. In effect, you will still remain liable under the terms of the loan contract even if the vehicle is no longer in your possession.

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Glossary of Terms

Annual Percentage Rate (APR): The interest rate charged for an entire year’s time.

Bad Credit: A credit score of under 550 which is the direct result of late payments, chargeoffs, repossessions or a bankruptcy filing by a consumer.

Bankruptcy: A legal status referring to a consumer’s inability to repay debts to creditors.

Credit Score: A number between 350 and 850 that is a numerical representation of the consumer’s ability to repay debts according to the information contained in their credit history. This number tells future creditors about whether or not the consumer is likely (or unlikely) to repay debts based on past payment behaviors.

Creditor: An entity or institution that provides financing for a car loan, mortgage or credit card.

Default: If the consumer fails to meet his or her contractual obligations to repay a loan agreement, the account goes into a past due status. It is also the failure to abide by the terms of the contractual agreement and can lead to repossession or added fees.

Down Payment: An initial payment put down toward the entire cost of the vehicle and is typically a percentage of the total cost of the vehicle being financed.

Interest Rate: An annual percentage based on the total amount of the loan, usually charged annually.

Late Fee: Additional charges that are applied to the loan when the consumer is unable to make timely payments.

Repossession: If the consumer fails to pay the payments according to the terms of the agreement, the dealer may seek to remedy the situation by seizing control of the vehicle.

Term: The length of the loan agreement.

Title: An official document issued by the government which proves ownership over the vehicle.

Warranty: A guarantee that repairs will be made if anything breaks down on the vehicle, preventing it from being used.

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