What is BHPH anyway?
BHPH stands for Buy Here Pay Here and it has changed the way cars are sold. Buy Here Pay Here is a type of dealership that caters to lower income or poorer credit consumers. Just because some people have made mistakes with their credit in the past or do not make a large amount of money does not mean that they do not need a reliable vehicle as much as anybody else. The BHPH dealerships cater to this type of clientele. Everybody needs a vehicle. The only problem is that people simply do not realize that a credit mistake or two can really hurt their chances of receiving a newer car or even any car at all. This is where BHPH comes into play.
How Does BHPH work?
BHPH uses a unique form of financing called in house financing. This is when the dealership essentially provides the customer the vehicle as an unsecured loan of sorts, paid back over the term in monthly, bi-monthly, weekly, or bi-weekly obligations. The car dealer, in essence, finances the purchase, rather than a bank or credit union. Usually, all that is needed to qualify is a statement of income and a proof of residence.The only problem with this is that often times the consumers default on their loans. This causes the dealership to repossess the vehicle which costs money. A cycle is born contributing to a rising price in the rate of the financing costs for new customers. The BHPH dealers compensate for this higher risk of product loss by setting an interest rate that is extremely high. Usually in the double digits. BHPH dealers tend to make as much money on the financing of the vehicle off of you as they do the vehicle itself. This is what comes with a high-risk loan and if it is your only option, you may have to just bite the high-interest rate bullet.
There are generally BHPH dealers located in every area, all over the country. This is a good thing for you the consumer if you are considering purchasing a car from a BHPH dealer. Generally speaking, the Buy Here Pay Here meaning is just that. If you buy the car there, the dealer may expect that you pay for your car at the dealership physically. Weekly, bi-weekly, and monthly payment options are at the discretion of the individual BHPH dealer. Same goes for online or mailed in check payments. The dealer has sole discretion over these options.
BHPH Dealerships Benefits Consumers
The benefits of using a Buy Here Pay Here dealership are as follows.
High-risk lending may cost more to the consumer; however, guaranteed approval is often times worth the high interest charged.
A punctual payment history helps to repair a poor credit history, as long as the BHPH dealer reports those payments to the major credit bureaus. Oftentimes, they will take almost any vehicle as a down payment for you to use. Older vehicles in almost any condition are taken in and given a fair amount to get the ball rolling on a sale.