You are better off with auto financing here from Los Angeles Auto Approval Center than from any Buy Here Pay Here dealer in the city. It may be more convenient to get financing and purchase a vehicle in the same place, but that convenience comes with a very high price. There are many reasons experts discourage car buyers from patronizing Buy Here Pay Here dealers, and you will learn about these reasons by reading on below.
Buy Here Pay Here dealerships are essentially used-car dealers that specialize in the sale and financing of old vehicles (about 10 years old and over) with high mileage. The car selection they offer to customers is limited to what is on their lot.
They purchase used vehicles at an auction and spend some money reconditioning them. Afterward, they sell the vehicles at marked up prices, as much as twice or thrice their respective values. Interest rates are also exorbitant, and can be as much as 30 percent.
The Buy Here Pay Here industry thrives regardless of the country’s economic situation because they cater to a specific market. They accommodate borrowers whose credit standings make them ineligible for financing from traditional loan sources (i.e., banks and credit unions). They make money from the least creditworthy of the population, those who struggle with debt and have low-paying jobs. These people are desperate to get behind the wheel, usually in order to keep their jobs, and they will do what they have to just to get their own ride.
The market they serve is also the reason Buy Here Pay Here dealers don’t usually report payment history. They don’t do business with prime borrowers and they are not in the business of repairing credit.
The Financing and Repayment System
A Buy Here Pay Here dealer is unlike the usual auto dealer where the consumer can choose a vehicle first before talking about financing. In the former, the discussion about financing comes first. The dealer will speak to you about what you can afford, and only after you give a response will he tell you what vehicles you can buy. Basically, the payments dictate the vehicle selection.
Buy Here Pay Here dealers are called as such because customers are required to go to the dealership to personally make the payment. The dealers don’t allow payment by check—they demand cash or money orders. Repayment is more frequent for these dealers. Customers return to the establishment either twice a month, every two weeks or every week.
Considering the kind of clientele this type of used-car dealer has, it isn’t surprising that loan defaults are common. Buy Here Pay Here dealers aren’t the forgiving type when it comes to missed or late payments. When dealing with them, one must know that not honoring the agreed repayment schedule comes with swift consequences. Repossession is done quickly, regardless of the location of the vehicle and the borrower.
Vehicles from Buy Here Pay Here dealers are often installed with technology aimed to help make repossession easier. For instance, electronic tracking devices allow the dealer’s repo men to locate the vehicle immediately should the customer skip a payment. Then, there is the ignition shutdown technology that stops the vehicle from running once repayment is overdue.
All repossessed vehicles are brought back to the lot and sold again to the next customer. This is why Buy Here Pay Here dealers make a lot of money even if customers default their loans: the cycle continues, and they sell the same vehicles time and time again.