Buy Here Pay Here is a type of dealership that arranges in-house auto financing for its customers. It’s an option for car shoppers who have bad credit and are unable to obtain financing from traditional banks or lenders. In exchange for assuming the risk, dealers typically charge higher interest rates to cover their losses.
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BHPH lenders also typically require more money down to minimize their risks. They may also sell costly add-ons, such as warranties and GAP insurance policies. This is because a dealer needs to make up for the additional risk of lending to a buyer with bad credit. Some BHPH lenders will even install tracking or disabling devices on the vehicle to ensure that you can’t run away with the car should you miss payments.
A buy here pay here dealerships lender may not report your payments to the credit bureaus. This can have a negative effect on your credit score and prevent you from being able to qualify for better loans in the future. Check with your BHPH dealer to see whether they report their buyers’ payments to the major credit bureaus before signing a contract.
While a BHPH loan may not help you build credit, it can be an affordable way to get your wheels rolling. If you’re a good borrower, your Buy Here Pay Here Ohio dealer will likely report your payments to the credit bureaus and your credit rating will improve over time. But if you’ve had problems in the past, be cautious about using this kind of financing.