Buy here pay here car dealerships have come under greater and greater scrutiny and criticism as consumers complain about their expensive prices, high interest rates and lightning fast repossessions. In recent years, they have been the subject of lawsuits and investigations by the authorities.
In April 2012, a federal consumer watchdog agency, Consumer Financial Protection Bureau, announced that they were investigating DriveTime Automotive Group based in Phoenix, AZ. No specific accusations have been made, but the federal bureau has been looking into their business practices and documentation.
If these BHPH dealerships are such bad guys, why has buy here pay here auto sales volume been rising rapidly in the last few years? Who do people flock to them to buy a used car that is often priced at way above its true market value? The answer is that it may be the only option that people with little or no credit have.
The payments are also cheap in small amounts, as little as $1000 or less as a downpayment and $50 – $70 a week. Of course, these ongoing payments that the purchaser is committed to will add up to a large expensive sum over time. But if someone is desperate and need a car to get to work, it may the only choice left for them to rebuild their life and credit. When things get better, they can move on to better car financing deals.
If you are someone who is stuck between a rock and a hard place, and this is your only option, take heart that you can still do your best to locate pay here buy here dealers that are willing to give you a reasonable deal. Believe it or not, there are some dealers that have successful sold cars to satisfied and happy customers, and they go on to purchase additional cars with the same dealer, or recommend friends and family to these dealerships.
A main reason why buy here pay here car lot deals have such onerous conditions is because they know that about a quarter of their customers end the deal in default. In order to continue being in business, they need to protect themselves and make money. Otherwise, they will be out of business, and there is no one left to offer used car deals to consumers with no or bad credit looking to turn their lives around.
So how do I know if the dealer is honest, fair and good to work with? How do I know if the deal is reasonable?
Tips On Finding Good Buy Here Pay Here Car Dealerships
One way is to check with the Better Business Bureau to see what type of rating and complaints the BHPH used car dealers you are interested in have. Not all BHPH car dealers are BBB accredited, but it is worth a check. You may also want to Google the name of the car lot online to see if there are complaints recorded. If you have friends, co-workers, acquaintances or family members who have purchased from the dealership before, ask about their experiences.
Check through their websites and see if they provide comprehensive information regarding their inventories, pricing, payment options and other details. You can also read up on their history, years in business and see if there are happy customer testimonials. The more information they are willing to provide, the more likely they will be transparent in their dealings with you as a customer.
Another way is to evaluate the type of deals that they offer to you. Compare what the price of the car that is offered to its Kelley’s blue book value. Even if it is going to be at a premium, see if you can negotiate it down to a reasonable level. Paying a 10% – 20% premium is much more reasonable than paying double the market value of a car.
If they offer you a deal at their highest interest rate levels but you feel that your credit rating is poor, but not necessarily all that bad, that may be a red flag.
You should also compare what they are offering compared to other ways you can get a car. Do you really need they pay up for a car at that point, or can you take a personal loan from a family member or close friend? Are their car charity funds offered by local churches or credit union loans that you can tap into?
If you have any doubts, and you feel that there is a lot of sales pressure, do not be afraid to excuse yourself and take time to compare and consider. A dealer who truly cares about providing a good reliable car to their customers will be open to your concerns.
Since these are old clunker cars in a BHPH car lot inventory, inquire about how the car has been inspected and reconditioned to ensure that they are driveable. Some buy here pay here dealerships also provide maintenance and servicing right on their premises. They may give you a warranty on the car. If you have problems, it becomes easier and less costly to get it repaired.
As it stands, buy here pay here car lots generally do not have the best reputation. There has been a lot of criticism about the way their predatory business practices and charging usurious interest rates on car loans. However, there are still some dealerships that care about offering a good reliable car at a reasonable price that they can work with.
