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Buy Here Pay Here Car Loans

Posted on Jun 04, 2012 by Thalia Green
Jun 04

Being turned down for an auto loan due to having no established credit history, leaves one shaking his head. How in the world does anyone get that first loan if no lender is willing to take a chance? In many cases, a potential borrower with poor credit has a better chance at securing auto financing than the person with no credit. It doesn’t seem to make any sense. What is the key to unlocking the credit mystery and getting approved for a car loan? Buy here, pay here car loans seem to have been designed to provide a solution for the first-time car buyer.


Buy here, pay here car loans is just another way of saying “in-house financing”. It simply means that the auto dealer is also willing to finance the car loan eliminating a third party lender. Because the seller is absorbing the risk, he can take a chance on customers with bad credit history of none at all. The term “buy here pay here” was coined due to the terms of the loan. Traditionally, this type of financing required that weekly or bi-weekly payments be made in person to the dealer.


The interest rate will usually be higher than the low rates offered by third party lenders. Of course, that is quite irrelevant when third party lenders won’t extend credit to the first-time buyer anyway. The upside is the opportunity for the first-time borrower to purchase much needed transportation and build credit at the same time.


There is another advantage to shopping at car dealers who do their own financing. The cars they sell must be affordable, so they aren’t squeamish about giving satisfactory value for the trade-ins they have a ready market for. It is easy to start in a low value, inexpensive car and once a payment history is established that auto can be traded in on a better one. 

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