The Downside of “Buy Here Pay Here”

If you’ve ever been in the position of having bad credit and needing a car, you surely realize that it isn’t too much fun. For many people in this position, the solution is buy here pay here car lots. This is because most banks or credit unions won’t give you the time of day when you need an auto loan and have bad credit. While you can certainly pay cash, this isn’t realistic for most people with bad credit. Buy here pay here lots allow you to pay for your car slowly. But just because “buy here pay here” is an option doesn’t always mean that it’s a good one.

buying a car

Here are a few reasons to NOT go with the “buy here pay here” option:

  1. You’ll be hit with predatory interest rates. Most buy here pay here car dealers charge high interest rates. These can range from 20-40%. Most also require weekly payments, which is a frequency that many find inconvenient.
  2. Buy here pay here car dealers make money in two ways: high rates of interest (as described above) and by marking the vehicle up. In fact, many vehicles are marked up by 100-200% of the car’s actual worth.
  3. They don’t offer warranties (usually). You are not likely to get any kind of warranty at this kind of dealership. So if you have problems with your car, you may find paying for repairs, weekly payments, and high rates of interest to be too much to handle.
  4. It won’t improve your credit score. If you are hoping to repair your credit, a buy here pay here lot is not going to help you because they do not report a payment history to credit bureaus.

While no credit check car dealers can seem like a great option to someone with bad credit or no credit, it’s best to understand the downsides of this option before going too far.