Is Buy Here, Pay Here a Good Idea?

First, let’s answer the question, “What is buy here, pay here financing?” Buy here, pay here financing is when the dealer fills the role of both seller and lender. When you finance a car with a buy here, pay here dealership, you’ll make payments to the dealer instead of to the bank or another financial institution. So, is buy here, pay here a good idea for Brush car shoppers? If you have challenged credit, this form of financing can be beneficial. Read on to learn more about the possible pros and cons.

What Are the Benefits of Buy Here, Pay Here?

Are buy here, pay here car lots good? There are a lot of possible advantages to in-house car financing, depending on your individual situation. Here are a few examples:

• Quick Service: Financing through a dealership means you can get a loan almost immediately. The waiting process is almost non-existent because you don’t have to work through a lender. Instead, the dealer will provide you with a guaranteed auto loan approval, assuming you meet their requirements.
• Flexible Loan Terms: When you finance through a dealership, you’ll have a bit more control over the terms of your loan—probably more so than you would with a bank. This rings especially true if you have not-so-great or no credit.
• Agreeable Interest Rates: In many cases, buy here, pay here financing can afford borrowers interest rates on par with those offered by conventional lenders. That’s not always the case, though, so be sure to shop around if you’re given an interest rate estimate that seems high.
• Workable Down Payments: If you don’t have a down-payment savings, buy here, pay here financing can be a solid option. Some in-house financing dealerships don’t expect down payments from borrowers. If they do, they tend to be more forgiving than your average lender.

What to Consider

Are buy here, pay here car lots bad? No, but this form of financing isn’t for everyone. Here are a couple of possible disadvantages to consider:

• Credit Bureau Reporting: Not all dealerships that offer in-house financing report to the major credit bureaus, so even if you make payments on time, your credit score may not reflect it. Be sure to ask ahead of time. 

• Vehicle Tracking: Some—not all—in-house financing dealerships install a tracking device in their borrowers’ vehicles. This is done for collateral, so if the borrower can no longer make payments, the dealer can easily repossess the vehicle.

Explore Your Financing Options at McDonald Toyota of Fort Morgan

To recap: is buy here, pay here a good idea? It can be if your credit needs work, as it offers a lot of advantages that may not be available through a conventional lender. Contact us at McDonald Toyota of Fort Morgan to learn more, or visit us near Akron and Sterling to speak with one of our finance experts. You can also refer to our car-buying tips for more information on auto financing, leasing vs. buying, and more!