Pros and Cons of "Buy Here, Pay Here" Dealerships

Chances are you have heard of the "Buy Here, Pay Here" phenomenon that has been trending at dealerships across the country. While some do like this, this new way of getting a car definitely has its share of critics. According to Lantern by SoFi, there are plenty of other options, including getting a loan customized for your needs even if you have bad credit. So, isn’t auto loan refi amazing?. However, before we digress too much, let's take a look at some extra information regarding these "buy here, pay here" auto dealerships.


What is a Buy-Here, Pay-Here Auto Dealership?


If you see a car lot that is advertising their ability to sell you a car even if you have no credit or bad credit, then chances are this is one of those "buy here, pay here" dealerships. This basically means that they are going to sell you a car where you will be able to buy it there and also be able to make payments at the dealership as well. They usually are dedicated to offering a buying opportunity to those who probably wouldn't qualify for traditional loan terms. Here are some of the pros and cons:




They do not require any credit whatsoever.

Perhaps one of the best benefits of acquiring a vehicle from one of these "buy here, pay here" dealerships is that there is no need for credit whatsoever. They often will not even check it!


Acquiring a vehicle is very easy.

Simply put, it's easy to get a car! When you are only dealing with the seller directly, it will cut out the middleman. Naturally, dealing with a bank means that they are going to look at it strictly from a business standpoint. If they think that you are too high of a credit risk, it could mean that they will turn you down for a loan because they think they might lose their investment.


They will take older trade-ins.

This type of car lot will often deal with vehicles that are not quite in as good a shape as the other car lots, so that means that they will often be willing to take older cars as a trade-in.


Of course, there are some cons to this type of vehicle finance arrangement as well. Take a look at some of the reasons why you might want to try to avoid this type of vehicle financing, if at all possible:


The interest rates are very high.

One of the main problems with these types of car lots is that they often charge very high interest. One example of this would be an arrangement that is as high as 20 percent or more. To put this in perspective, this is about the same interest rate as a bad credit card, and it is about FOUR TO FIVE TiMES as much interest as you would pay at a traditional car lot.


These vehicles will often come with a tracking device.

That's right. About two-thirds of these dealerships will track your car so that they can easily repossess it if you default on the payment arrangement.


The payment requirements are odd, to say the least.

Many of these dealerships will require you to make payments on a weekly basis, and some will even want you to make your payments IN PERSON. A bit inconvenient, to say the least.


There you have it. Here are some of the advantages and disadvantages of getting a vehicle through one of these "buy here, pay here" car lots.

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  3. "Buy here, pay here" dealerships offer a convenient solution for those with poor credit, bypassing traditional loan requirements. Their no-credit-needed policy simplifies the car-buying process, making vehicle acquisition easier. By eliminating the need for credit checks and banking intermediaries, these dealerships provide accessible options for individuals seeking transportation. Overall, they offer a practical alternative for those facing credit challenges, enhancing accessibility to essential transportation.
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