When it comes to finding an auto dealer willing to work with your bad credit to help you get a good deal on a loan, the going can be a bit rough. With tough economic times behind us and economic uncertainty in the future, it can seem more and more like dealers and lenders everywhere are re-tightening their purse strings, raising interest rates, and denying clients left and right. But for those with less-than-stellar financial histories looking for a good way to get into a new vehicle, a buy here pay here (BHPH) dealer might be just the solution you’ve been looking for – if, that is, you know how to pick a good buy here pay here dealer from a substandard one.
You don’t have to be a financial expert or heavily connected to the financial industry to understand what to look for in a top-tier buy here pay here dealer, or to avoid being taken for a ride by the less than reputable options out there. A basic set of guidelines can help guide any buyer toward the best option available, and away from all that confusing mess that some dealers might try to use to cloud your judgment. And that means you can find the right deal for you without losing out on the benefit that comes from borrowing from a buy here pay here lender.
Here’s a quick rundown on what you should look for in a quality buy here pay here dealer, and what you should expect from a quality lender when shopping for your next used car. Chances are, by following these guidelines you’ll be driving away in a sleek new pre-owned model in no time – and without the pains that can come with overspending or signing bad financing along the way.
#1 – The Website
There’s a good chance that you’re going to start your search for the right BHPH dealership online, just like if you were shopping for anything else. If you hadn’t already thought about that, then you certainly should now. While you may not want to actually purchase a vehicle online without seeing it for yourself, you can start looking at dealerships and gathering information this way quite easily – and from pretty much anywhere.
As you look at different Buy Here Pay Here dealers, pay attention to the information on their website and how it’s all laid out. The website should be easy to navigate so you can find the information you need without laborious searching – the website should make you feel like you want to give them your business. Consider this: the website is the first impression this dealer is making on you, so is it a good one or a bad one? Trust your instincts on this and make sure you choose a BHPH dealer that has a good website that is easy to use.
You should be able to find information about the dealership on the website, including things like their inventory, the person or people who own and operate the dealership, and their history in the community. Look for contact information – you don’t want to be struggling later to find a phone number you need after you’ve made a purchase. They might also have some financing tools you can use before even visiting the dealership to start figuring out what kind of vehicle you might be able to afford. All of these tools and features make your car-buying experience easier and tell you a lot about if the dealership values your time and business.
#2 – The Shop Itself
The easiest way to get a feel for what kind of lender you’re possibly about to work with is the condition of the shop itself, and what the basic layout of the dealership can tell you about the dealers themselves. Is the showroom dirty, or lacking in basic amenities like a comfortable seating area or lounge, internet access, or an easy view of the workshop? These are all pretty standard features of any reputable dealership, and the absence of any or all of these should be a bit of a red flag for any discerning shopper. In the quest for transparency and good customer service, some things come basic – and these are no exception.
You should trust your instincts when it comes to the dealership too. If something about it just feels “off” to you, then that’s a red flag that you shouldn’t ignore. Just like any other business, a BHPH dealer should feel welcoming and inviting to you as a customer – you should want to do business with them and build a relationship with them. You want to see that the owners take pride in their business because that’s an indicator that they care about their customers and their reputation within the community.
Take time to also look around the shop for any kind of certification or registration with an official brand or manufacturer. Any shop with a service center should be staffed by licensed mechanics, and it’s always helpful to check for awards for recognition from local business groups to let you know this buy here pay here dealer is looking out for its consumers. Some buy here pay here dealers may even belong to the National Association of Buy Here Pay Here Dealers (NABD), a national group that monitors all member dealers for basic quality. These can mean a better experience for you as a consumer and less time spent worrying that you made a less-than-perfect choice when picking the dealer for you.
#3 – The Employees
This may seem a bit strange at first, but it really is an important consideration. When you visit a BHPH dealership, take some time to look at the employees and notice their attitudes and body language. While everyone can have a bad day, in general, you should see that the employees look pretty happy and energized. If you notice that every employee at the dealership looks absolutely miserable or you are repeatedly ignored, then that is a big red flag.
A good buy here pay here dealer knows the importance of treating its employees well for the sake of the business, if for no other reason. Miserable employees typically mean that something is wrong at the top and you can see it trickling down to the salespeople and other staff. This could mean their dealership is in trouble or the owners just don’t care anymore – both of those are bad news for you as a customer. If you see these kinds of red flags, then don’t be afraid to just walk away and take your business elsewhere.
Also, don’t forget the fact that you should always receive excellent customer service at any business you visit. They are able to stay in business because of their customers. If they don’t place your needs above everything else, then they have lost sight of how important you are as a customer. Don’t abuse this, remember to treat all the employees with respect, but be aware that you can take your business somewhere that appreciates you – your money and time are both valuable and should be respected.
#4 – The Inventory
If it’s easy to judge a man by the company he keeps, then it’s even easier to judge someone by the products they sell – and at a buy here pay here dealer, that means inventory. Take a look at the lot and make sure there are no warning signs, like badly beaten rust buckets or dinged up beaters waiting to be scooped up for a rock-bottom price. While these can be good options for some buyers, they mostly indicate that the dealer may be “churning” – that is, selling cars to buyers who can’t afford them and then quickly reselling after repossessing. If you can, try to work with a dealer who sells certified pre-owned vehicles, or at least those with clear and clean vehicle history reports – that way, you can be sure the vehicle you think you’re buying is actually the vehicle it claims to be six months down the road.
This is also where looking ahead at the inventory on the dealer’s website can come in handy. While the online inventory might not always 100% lineup with what they have on-hand (especially when it comes to used or pre-owned vehicles that can come in unexpectedly), the online inventory should still be fairly accurate. If they claim to have a lot of vehicles that are mysteriously absent – and not just at a second lot – then that is a major red flag. You should always be on the look-out for transparency, and lack thereof, from a BHPH dealership. When something seems wrong, then it probably is.
#5 – The Down Payments
A lot of buyers with poor or no credit are worried about down payments on vehicles, so looking for a quality vehicle with a low down payment can seem like the best course of action. The fact is, it’s best to agree on a reasonable down payment rather than none at all since the more money you’re willing to put down now means less money spent on interest in the long run. Of course, the opposite can also be true – look out for dealers trying to push too big of a down payment on you, since this can often indicate plans to repossess or resell your vehicle later on the assumption you’ll be missing payments in the future.
In general, what is best for you will depend a lot on your financial situation, both in terms of how much you can reasonably put down upfront and the amount you can afford to pay each month. You should already have a sense of your finances before going to a BHPH dealer, particularly what you can afford to make as a down payment without getting in trouble financially. Figure out the absolute most you can spend up-front and never go over that amount. No matter what a salesperson might suggest or tell you, stick to the maximum you can spend and do not go over that.
In fact, if the salespeople seem too pushy and want you to spend too much, that’s a big red flag. They should want to make sure your financing is ultimately something you are comfortable with, both in terms of a down payment and ongoing payments. While the right amount will depend on a lot of different factors regarding your finances, you should aim for a target of about 20 percent of the total cost of the vehicle, if possible.
#6 – The Warranties
Since many buy here pay here dealers don’t deal with new or factory-direct cars, finding a quality warranty from a buy here pay here dealer can be a bit of a challenge – but not impossible. Plenty of dealers work with certified pre-owned vehicles, which usually come with some kind of after-market warranty, and many dealers simply attach an additional after-market warranty before sale. This means you’ll be able to drive off the lot with the confidence that your new vehicle won’t break down as soon as it hits the pavement thanks to a thorough check-up from a mechanic, and that you can negotiate for a refund if anything does go wrong right off the bat.
#7 – The Vehicle History Report
So, this is something you might not be able to find at the dealership itself, but it’s important either way. Since you are probably looking at used or pre-owned vehicles at BHPH dealers, you want to be sure to look for a vehicle history report on any car or truck you are interested in before making a purchase. The dealership might actually provide these reports from third-party services at their own expense to show you the history of the vehicle.
If they don’t, then you should pay the expense of running such a report on any vehicle you are interested in buying. These reports are a lot less expensive than replacing an engine in a car you just bought. One thing to remember, however, is that they are only as accurate as the information that is reported to them about a vehicle. If you see something negative, then use that information – but just because you don’t find anything, doesn’t mean there has never been a problem. Only that it was never reported.
#8 – The Interest Rates
Unless you are paying the entire cost of a vehicle upfront, the biggest factor to consider before making a purchase is the interest rate on the loan you’re accepting when making a purchase. Every borrower wants the lowest interest rate possible, but for buy here pay here customers this simply isn’t always possible. Since buy here pay here dealers work with bad credit buyers, there’s a natural push to charge higher interest rates as a form of self-protection from defaults on loans – and for some, these rates can be exorbitantly high. That’s why it’s best to find a dealer willing to negotiate on interest rates.
Of course, just the mention of “interest rate” and seeing numbers can quickly feel overwhelming for some people, especially if math was never a subject you were great at. That’s understandable, but the good news is that there’s nothing to be freaked out about. Simply put, the interest rate is how much more than the original loan amount you will have to pay, based on the loan amount. So, for example, if you have a loan of $1,000 with an interest rate of 15 percent then you will pay an extra 15 percent on the loan, or $150.
As you can see, the higher the interest rate, the more you end up paying. That’s why you always want to look for the lowest interest rate possible over the shortest time you can afford to repay the loan on a vehicle. Also, keep in mind that the highest interest rate on even a subprime loan should rarely exceed 20 percent at most.
#9 – The Monthly Payments
Some dealers look for borrowers willing to pay super low monthly payments over a longer time. At first, that might seem like a good deal – I mean, who doesn’t want to pay less money? But here’s the thing: you might be paying lower amounts each month, but that usually means you’ll just pay them over a longer time. The longer you’re paying back a loan, the more the interest is being calculated and adding up. So making low payments over a long time will end up costing you a lot more money in the long-run than larger payments over a shorter time.
That’s why it’s helpful to find a dealer willing to negotiate for reasonable monthly payments that both meet your month-to-month budget and keep your loan duration nice and short. Just like the down payment, you need to have a sense of what you can reasonably afford to pay each month for a vehicle loan payment. Don’t go over what you can afford, or you’ll just get yourself in trouble, but try to get a loan with payments near your limit so you can pay it off as quickly as possible. This way you can handle your auto loan in both the short term and long term without fears of overspending on interest payments.
So if you’re on the hunt for a quality buy here pay here shop, these basic guidelines should help you find a lender that won’t drive you into a corner financially. Keep these basic rules in mind and you’ll be driving off the lot in a quality used car in no time – and you’ll be a little more informed on how to get a great deal.
