Bad credit and need wheels fast? If this sounds like you, whether it’s good news depends on a number of factors—such as your credit and your readiness to keep all of your toes on the tightrope.
These aren’t your typical www.freedomautosalesidaho.com because they both sell you the car AND finance it. Not one bank. Not one credit union. Just you, and the dealer making an agreement. Simple sounds, a few bits more.
The target of these dealerships are the customers that have found their credit reports are as messed up as battlefield casualties. Mainstream lenders may regard you with disdain if you’ve survived bankruptcy, endured divorce hell, or slipped and fell through medical debt. But buy here pay here dealers lay out the red carpet.
Convenience costs, just pay it – and it’s likely to be more costly than you can afford.
Rates of interest at these places will make you weep. Expect double or triple the cost of what good credit buyers pay elsewhere. Conventional auto loans will grant a 5-7% interest rate, but typical buy here pay here lots charge 20-30%. That difference goes back thousands dollars.
The payment schedule also hits different. Unlike the typical monthly payments, many want weekly or biweekly cash payments at the dealership. Other install devices can make your engine disable if you miss payments. Late by a day? Tomorrow you may be walking to work.
You’d also certainly not be able to browse through cream of the crop vehicles. The majority of inventory is higher mileage used cars that have driven a lot of road. Selection is more limited and practical as opposed to pretty.
Plus, a particularly painful catch for many US citizens: Many of these dealers don’t report your payment history to credit bureaus. Your diligent payments will do nothing to rebuild your score because you are paying premium rates without the benefits of credit improvement.
The good news, however, is that the approval process is lightning fast. Whereas you could wait days for approval from conventional financing, buy here pay here spots typically make you drive home that day. Speed is important when you need to have transportation to keep your job.
Moreover, these dealerships are also the ultimate vehicle of transportation when all other doors in the same are rationalized. Sometimes it may be easier to pay high interest rates than to lose your job getting to work.
If you find yourself thinking of this route, play it wise. Research dealer reviews online. Inquire directly if they report to credit bureaus. An independent mechanic check any vehicle before purchase is such a small investment that could save you from major headaches.
Negotiating the vehicle price is not one to skip. There is a lot of revenue that deals of these car makers earn through financing, so they might have some wriggle room on the stickers. Make sure to read every word of the contract and be attentive to repossession terms and included fees.
Buy here pay here dealers, consider them as a short term solution in case of tough times, not a long term financial solution. The best play is to use this option as a way of setting up the eventual rebuilding of credit for better terms when you do it next time.
These dealerships fill a gap in the market for those millions of Americans stuck in credit score limbo. Accessing necessary transportation when conventional financing is not an option means running to them, albeit on terms that would make financial advisors cringe.
Bottom line – In the right situation, these places can be a lifeline, but understand exactly what you’re signing up for. This convenience comes with a heavy price tag that needs careful consideration, and an understanding of how to get off this course as soon as you can on your way to a better financial option down the road.