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Buy Here Pay Here Dealers vs. Traditional Dealerships

Buying a car can be an overwhelming decision for a person to make because of the myriad of buying choices available. In 2016, nearly 18 million cars and trucks were sold, and these records came from new car sales alone. Craigslist, Letgo, and other online and in-app sales platforms have transformed the way that cars are bought and sold worldwide. But one common factor in purchasing a car is many people need help with their purchase, including the wealthy. Affording thousands of dollars up front isn’t easy.

Bank loan applications are the route many car buyers go, but that requires good credit. Unfortunately for those with bad credit, buying even a used car without assistance can be a hassle. This is where buy here pay here dealerships offer a unique car buying solution. These sorts of dealerships provide financing for most customers and can work with those who have bad credit. Understanding the differences and advantages of using a buy here pay here dealership can make a big difference in the lives of those who need a car.

Defining the Terms - The Differences in Dealerships

used cars

If you’re the type of buyer who only wants to go through a dealership, it’s important to know the difference between how traditional dealerships operate and how buy here pay here dealerships operate. This will help you decide what dealership type is best for you to work with.

A traditional dealership is a dealer that obtains cars either directly from the factory or as a trade-in vehicle from one of their clients and you, as a customer, must make payments on vehicles from a traditional dealership either in full or through a predetermined loan. Car purchase and loan applications are dependent on a person’s credit history and sometimes even dependent upon a background check.

A “buy here pay here” ( or BHPH) dealership is a dealership in which vehicles are financed on the lot, and potential buyers can forego the traditional process of applying for a loan through a bank. It allows those who have poor credit or no previous success applying for traditional loans to apply for in-house credit on a vehicle. Previously, buy here pay here dealerships were somewhat harder to come by. However, many new car dealerships today, including some brand-name dealerships, now offer buy here pay here financing.

How Buy Here Pay Here Dealerships Work

A common misconception about buy here pay here dealerships is that the majority of their customers are people with poor credit. Buy here pay here dealerships are available for everyone to use, however, they are advantageous for people to use because they are not solely dependent upon your credit history for loan application and approval. However, their quick approval processing time is great for those who need a new car quickly or those who might just be looking to build their credit with a one-time payment. Generally, buy here pay here dealerships want to work with their customers on finding a solution because they want to sell their products.

Buy here pay here dealerships will usually start by assessing how much you can afford to take out against a car. To figure this out, they will ask you financial questions, often about how much money you make each year, to determine the amount you are willing to pay each month. From there, most buy here pay here dealerships will show vehicles on their lot that fit within the customer’s price range. Next, the dealership will go through the normal purchasing steps, and the customer will leave with the car they select.

Payment at buy here pay here dealerships can vary, so be sure to discuss the payment terms with the agent who helps you with your purchase. Sometimes, mail-in payments are offered. However, some dealerships expect clients to bring payment to the dealership in person. If this is the case, avoid buying a car from a dealership that is far away from your home, or avoid buying from that dealership if you foresee yourself leaving that area before the terms of payment are up.

Differences in Benefits Between Traditional Dealerships and Buy Here Pay Here Dealerships

Like most things in life, there is no cut and paste answer to whether you should use a buy here pay here dealership or a traditional dealership. What it usually comes down to is comparing personal needs against the offerings of both dealership types.

The Pros of Buying From a Buy Here Pay Here Lot Include:

  • Quick, often same-day access to a new vehicle
  • No need to have good or any credit history
  • Selections are often not just new cars, but also verified, trustworthy used cars
  • Repayment periods are often much shorter than normal loans, which can help you save money in the long-term
  • Buy here pay here dealers are more likely to take in a very old car as a trade, which means if you’ve been in the market for a new car for a while you might have a chance of getting trade-in value for your old car.

The Pros of Buying From a Traditional Car Dealership Include:

  • A thorough background and credit check that prevents you from buying anything you can’t afford
  • Security and the ability to work with a financial company you are familiar with
  • Predictable monthly payments on a lower-interest loan
  • Rigorous protocols in place to protect the buyer against purchasing a car for more than it is worth
  • Payment dates and late payment fees are somewhat more flexible

Whatever your choice is in the end, it is important to understand that both dealerships want to establish a trusted relationship with a customer as their priority. This will help both parties prosper in the long-run. Deciding between what type of dealership to buy from will be determined by individual need.<

Are you in the market for a car and are unsure where to start? Auto Bank of Kansas City has a team of buy here pay here professionals and years of experience to help you make the right choice about your next car purchase. With locations on 6901 East Front Street and 2000 E. Truman Road in Kansas City, we are committed to serving the Midwest with the best car selections around. Stop by today to see if working with a buy here pay here dealership is right for you.