If you’re currently struggling with a poor credit score, you might find that it’s rather difficult securing financing on a vehicle. Few financial institutions (including banks or credit unions) are willing to take the risk. As a result, you’re forced to settle for a buy here-pay here dealership, which most customers aren’t willing to do. Of course, many of these individuals have shortsighted opinions regarding this process, and they may be unaware of the benefits that these businesses provide.
That’s where we come in. Below, we’ve provided several shortsighted opinions on the entire buy here-pay here industry. When you’ve finished reading, you’ll understand why this is a perfectly logical route. Then, before long, you’ll be researching “buy here-pay here near me.”
Shortsighted Opinion #1: BHPH Cars are More Expensive Than Traditional Dealership’s Cars
Some customers may assume that buy here-pay here dealerships get their negative stigma because of their high car prices. This couldn’t be further from the truth. Ultimately, these dealerships price their vehicles similarly to any other car seller, and they may even discount the values because of the high-interest rates (which we’ll get to in a second). These dealerships are still competing against rival businesses, meaning they should still be pricing their vehicles competitively. Plus, in the event that a car is overvalued, it’s on the customer to determine when they’re opting for a bad deal. There are a number of car-pricing resources that these individuals can refer to, including Kelley Blue Book and Craigslist. By doing your research before heading to a dealership, you’ll understand when the business’s prices are overvalued.
While dealerships don’t tend to overprice their vehicles, they do accompany their finance agreements with relatively high-interest rates. This method makes sense since the business is essentially helping out high-risk customers with poor credit standings. There’s a chance that these individuals will be incapable of affording their monthly payments, in which case the dealership is unable to make money on the sale. The high-interest rates are simply a way for these businesses to protect themselves in case a customer doesn’t meet their financial obligation.
Furthermore, some customers may assume that these dealerships’ vehicles are lackluster and underwhelming. Sure, it’s unlikely that you’re going to see many current-year vehicles sitting on the car lot. However, there’s also a good chance that the buy here-pay here dealership’s used inventory is comparable to a traditional dealership. In other words, the quality of your targeted vehicle shouldn’t be a concern.
Shortsighted Opinion #2: There’s No Incentive
Some consumers assume that there’s little incentive to even pursuing a vehicle from a buy here-pay here dealership, and they assume it’s better to ignore this route altogether. However, for some customers, this is their only realistic option for buying a car. Assuming banks or credit unions are unwilling to finance the deal, there’s really no alternative for those who need a vehicle.
Sure, if you live relatively close to your worksite, you could consider riding a bike. If you live in a busy city, you could look into taking public transportation. However, for most individuals, a car is required in order for them to get to work. Without these buy here-pay here dealerships, they wouldn’t be able to purchase that car, and that means they wouldn’t be able to get to work. It’s a vicious circle that seemingly has no remedy, confirming why it may be best to bite the bullet and tolerate the high-interest rates.
Shortsighted Option #3: Dealerships Will Repossess Your Car
Now, this isn’t entirely shortsighted, as there are certainly some dealerships out there that will quickly punish customers if they don’t complete a timely payment. Occasionally, these businesses will repossess a car, and they may also activate a secretly-installed (and highly illegal in some states) function that will prevent the vehicle from operating.
Of course, these dealerships are typically operating under unethical logic, anyway. It’s the same risk that accompanies a standard car dealership, as drivers could be unlucky, opt for an unrepeatable business, and subsequently find themselves with a lemon. In other words, you shouldn’t have these worries if you pursue a vehicle from a trustworthy buy here-pay here dealership. While you’ll surely see a decline in your credit score if you fail to make a monthly payment, there’s little chance that the dealership is going to punish you with repossession. Rather, they’d prefer if you kept the vehicle and continued to pay for the car and accompanying interest rates. Taking the vehicle away from the customer is truly a lose-lose situation for both sides.
Shortsighted Opinion #4: Credit Unions Are Superior
We mentioned previously that customers might not have any other option than to opt for the financing deal from a buy here-pay here dealership. However, this obviously depends on each individual’s credit situation, and you might find that a credit union is, in fact, willing to work with you. Of course, this doesn’t necessarily mean that this financing option is better than the buy here-pay here route.
These credit unions might be willing to take on a customer with struggling credit, but it’s likely that you’ll still find yourself in a similar situation to those who secured financing via a dealership. The credit union will surely require high-interest rates, providing little financial incentive to opting for this route. Plus, if you secure financing from a dealership, you might be able to negotiate other fees (including the price of your car) into your agreement, saving you some extra money over the alternative option. This obviously isn’t possible when it comes to credit unions.
Ultimately, the best course of action is to shop around for the best possible deal. Even if you’ve secured an offer from a credit union, you can use this value as leverage against the dealership. When these businesses see that you actually do have an alternative option, they might be more willing to back off their demands.
