If you have poor credit and don’t qualify for an auto loan from a traditional lender, a buy here pay here near me may seem like the perfect solution. This type of dealership offers financing directly through the car lot rather than through a bank or credit union. While it can help some people, it also has some drawbacks to consider.

How Does a Buy Here Pay Here Dealership Work?

Buying a used vehicle with buy here pay here financing at a local dealership is basically the same as shopping at any other dealership. You select a vehicle, apply for financing, and receive approval. The difference is the lender isn’t a traditional bank or credit union, but the dealership itself. This is known as in-house or direct lending.

The interest rate is usually the maximum allowed by law in your state, plus an additional finance charge that the dealership can set. This is often a much higher rate than you would get from a traditional lender. In addition, the dealer may require a high down payment and payments that are made on a weekly or biweekly basis rather than monthly.

If you don’t make your payments on time, a BHPH dealer may repossess the vehicle. Some dealers are able to resell the cars they repossess quickly, so it’s important that you stay current with your payments to avoid this risk. The dealer may also try to sell you extras, such as a warranty or GAP insurance policy, that add up to more than the cost of the vehicle.