Despite the cost (second only to that of a home, in most cases) the purchase of a vehicle is really no different than any other purchase. It doesn’t matter if we’re talking about a new TV, an outfit from Amazon or even a meal at a restaurant. Regardless of what we’re purchasing, an intelligent consumer performs their due diligence upfront, confirming that the item to be bought meets both their budget and their expectations. Fully-prepared to pay, the most basic among their expectations is satisfaction, an expectation that increases based on the expense.
With that in mind, our expectations in the purchase of a vehicle tend to be fairly lofty. Cars and trucks, crossovers and SUVs, have been elevated to the point where they’re a core component within our cultural mindset; an entitlement if you will. That said, not every prospective buyer is built equally. Some may be well-researched, others may be operating on a whim. Some are well-financed with reliable credit scores, while other buyers may not be as fortunate. And yet, the same expectations of satisfaction are in place, regardless of the buyer’s preparedness.
Perhaps this disparity between ‘expectation’ and ‘preparedness’ is what has empowered so many less-than-reputable Buy Here Pay Here dealerships to succeed. By exploiting an almost universal expectation of satisfaction in less-prepared buyers, BHPH dealers exist as a desert mirage or lifeboat, restoring hope in the underserved. Now, I stress that there are plenty of reputable BHPH dealers, but it’s important that buyers be conscious of the terms they are agreeing to.
When I use the word ‘entitlement,’ it is employed with a slightly negative connotation. By this, I mean that many buyers’ expectations are unrealistic. We visualize the car or truck of our dreams and feel it should be ours. For a well-qualified buyer, it’s as simple as confirming that such a vehicle fits their budget, based on their assurance of securing a low APR. But its different for someone with a subprime credit score; especially if they also have such limitations as a lower income, lesser down-payment or lower-valued trade-in. Even if they are approved for financing, it will be at a significantly higher APR. And comparing the two kinds of buyers, the difference in financing the same vehicle could be hundreds of dollars per month.
So, why would a buyer set themselves up for further financial ruin, based on their inability to slide their ‘dream car’ lower on their list of priorities? We’ve seen both the risk and lasting effects of subprime lending within the mortgage industry, why do so many still show a lack of impulse control in car-buying? Bottom-line: if you have subprime credit, understand the limitations of your budget. Be willing to ‘settle’ temporarily, in order to repair your credit and finances before trying to secure your dream car.
Because here’s something you may not be thinking of. Spending less on a car will leave you with more money available to you. 36-months of diligent payment to your creditors can have a huge effect on your credit score. This might empower you to buy a new vehicle down the road, or even better, it might empower you to buy the car that you really can’t afford right now, pre-owned, and for far less. How much less? Well, if you’re buying it pre-owned, the original owner shouldered the bulk of the depreciation. After three years, that vehicle could be valued up to 46% lower than the original sales price. Waiting is a small sacrifice to pay when you increase your options, and likelihood of satisfaction.
So, if you do have subprime credit, don’t be a slave to your expectations or sense of entitlement. Play the long game, and do what’s right for you. And if your credit still requires you to work with a BHPH dealership, research them. Inspect the vehicle carefully. Read the fine print. Trust us when we say, you won’t regret it.
For a good look at the risks associated with Buy Here Pay Here dealers that operate as predatory lenders, check out this informative video by YouTube Channel ‘850 Club’:
