Buy Here, Pay Here Car Dealers

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A Buy Here, Pay Here dealership may seem like a reasonable option if you need a car, but have poor credit. Instead of borrowing money from a bank or credit union, Buy Here, Pay Here car lots finance your car directly. Instead of getting paid cash when selling the car, BHPH dealers carry the loan themselves.

Many of the lots require customers to return once or twice a month to make loan payments in cash — hence the term “Buy Here, Pay Here.”

Dealers say they offer a valuable service, giving people with bad credit access to transportation so they can provide for their families. It may sound appealing, however BHPH car loans usually have higher interest rates and unfavorable terms. It is also possible for the dealer to charge more for the car than it is worth after interest and fees have been deducted.

Common features at Buy Here, Pay Here dealers

Strict repayment agreements:

• Instead of making monthly payments, BHPH dealers require weekly payments.
• Some require you to bring in cash payments.

The salesperson will only show you cars based on what you can afford:

• The cars usually have been repossessed and resold many times.
• They are sold for thousands of dollars above the Kelley Blue Book value.

Their cars are expensive and have had many owners:

• The shopping experience is opposite to a conventional sale; they review your finances first then decide what care you can afford

High interest rates:

• Because the consumers have bad or no credit, they are charged high interest rates (18-35 percent)

Doesn’t help you build credit:

• Many BHPH dealers do not report payments to the major credit reporting agencies, so the loans do not help to improve your credit score

County of Los Angeles Department of Consumer and Business Affairs. Last change: Dec. 6, 2022