Traditional Car Lots VS Buy Here/ Pay Here

Let’s explore some alternative financing for buying and selling used cars.

What is a Buy Here Pay Here used car lot?

Buy here pay here dealers typically make financing available to their customers via in house funds.  Arrangments are made through the dealer and payments are made directly to the dealership or through a servicing company.  As opposed to making regularly scheduled payments to a bank or loan company, you’ll make weekly or bi-weekly payments to the dealer.  Usually these dealership only accept cash or check, knowing that the reason the customer is using this type of dealership is due to the fact that they already have less than stellar credit.  It’s possible to see interest rates in the double digits at some of these lots.

Typically, these lots often collect, process and manage payments, which can be a bit of a headache.  They’re in the business of selling cars, not banking.  Often these dealerships look to creative ways to turn their auto notes into cash by selling auto notes to a buyer.  There are plenty of buyers of auto notes spread across the country.  Many offer the dealerships the opportunity to turn the loans into cash, which is paid directly to the dealer at closing.