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What to Expect At A Buy Here Pay Here Dealership

Common Myths & Questions

Last Edited: October 16, 2022

Buy Here Pay Here (BHPH) financing is a type of in-house financing offered by dealerships to help customers finance a vehicle purchase. With BHPH financing, the dealership is both the lender and the seller of the vehicle. This can be beneficial for customers who may have difficulty getting approved for a loan from a traditional lender, such as a bank or credit union. There are a few things to expect if you're considering BHPH financing: 


1. The interest rates are typically higher than with traditional financing.

BHPH dealerships are known for their high interest rates, which can make your monthly payments more expensive.  However, there are a few reasons why you may still want to consider a buy here pay here dealership. If you're able to pay off your loan faster, you'll save money on interest. While the interest rates at these dealerships are high, the overall cost of the loan will be lower if you're able to pay it off quickly or add to your principal. 

Even though the interest rates are high, the interest will still cost less with CarXpress than if you finance through a traditional BHPH dealer. This is because CarXpress offers a lower APR for buy here pay here dealerships. Even though buy here pay here interest rates are high, there are still some benefits to consider. And, with CarXpress, you'll still get a lower APR than you would with a traditional lender.

 

2. Down payments start at $1000 & up! 

If you're looking to finance a car, you can expect to make a down payment of at least $1000. However, making a larger down payment can help you pay off your car faster and lower your bi-weekly payments with CarXpress. So if you can afford it, putting more money down upfront is always a good idea.


3. You may be required to make weekly or bi-weekly payments, rather than monthly payments. 

There are a few reasons why buy here pay here dealers may prefer biweekly payments. One reason is that it helps the customer pay off the loan faster. When you make biweekly payments, you are essentially making one extra monthly payment per year, which helps you pay off your loan faster. 

Additionally, biweekly payments can help build a better relationship with the customer, as they are more likely to remember to make their payment on time if it is timed with their paycheck. Finally, biweekly payments can be easier for the customer to manage, as they can budget their other bills around their biweekly car payment.


4. The dealership may report late payments to the credit bureaus, which can impact your credit score. 

When you make your car payments on time, it shows up as positive pay history on your credit report. This is important because credit bureaus use your payment history to help determine your credit score. The higher your credit score, the better your chances of getting approved for loans and credit cards with favorable terms. 

Making your car payments on time is also a good way to build positive momentum. If you make all of your payments on time for a year, you will have a strong positive pay history that will be difficult for creditors to ignore. This could lead to more opportunities and better terms in the future. 

Finally, it is important to stay current on your car payments because it is a major financial obligation. If you fall behind, you could be at risk of having your car repossessed. This could damage your credit score and make it difficult to get approved for future loans.


5. The dealership may require you to purchase additional products, such as an extended warranty, Gap insurance, or credit insurance. 

Gap insurance is designed to pay the difference between what you owe on your vehicle and the amount your vehicle is worth in the event it's totaled or stolen. If you don't have gap insurance and your vehicle is totaled or stolen, you'll be responsible for paying the difference between what you owe and the actual value of your vehicle.In some cases this could be thousands of dollars you owe on a car you don’t own any more. 

Beyond GAP, CarXpress does not require any additional credit insurance or extended warranties. 

An extended warranty is an insurance policy on your vehicle and it acts as a safeguard against expensive, unforeseen repairs. Credit insurance is insurance that pays off your loan if you die or become disabled. Both of these products will cost you more money in the long run. With an extended warranty, you are essentially paying for peace of mind. The monthly payments are higher and you are charged more for the coverage. However, if you do have to make a claim, you will be glad you have the coverage. Credit insurance is a product that is often forced on buyers by lenders. The insurance pays off your loan if you die or become disabled. The cost of the insurance is added to your monthly payment. The insurance is not cheap and it is something that you may not need.


6. You may be asked to sign a contract that includes a clause allowing the dealership to repossess the vehicle if you default on the loan. 


Subprime lenders are those who lend money to people with lower credit scores. Because these buyers are considered high risk, the banks and dealers require them to sign a pre-repo agreement. This agreement gives the lender the right to repossess the property if the buyer defaults on the loan. The agreement also lists the costs of repossession and collection fees. This is important because it protects the lender from having to delay the repossession and collection. It ensures that the borrower is aware of the consequences of defaulting on the loan.


Conclusion

BHPH financing can be a good option for customers who have difficulty getting approved for a loan from a traditional lender. BHPH financing is a type of financing where the buyer purchases a car from a dealership and makes payments on the car directly to the dealership. The dealership then reports the payments to the credit bureau, which helps the buyer build up their credit score. BHPH financing can be a good option for customers who have difficulty getting approved for a loan from a traditional lender. However, it's important to understand the terms and conditions of the loan before signing anything. CarXpress in Prescott, AZ is a great place to get BHPH financing. They are a family owned dealership that has been in business for over 5 years. They don't require a credit check and the approval process is very easy.