What is Buy Here Pay Here Financing Buy Here Pay Here means that the place that sells you the product is also the place that is loaning you the money to purchase the product. The most common type of business using this type of financing is used car dealers catering to people with less than perfect credit, but there is no reason really that someone with good credit can’t also do business with a Buy Here Pay Here dealer. For instance BHPH can also be found at other type of businesses, like furniture dealers for example. As with anything Buy Here Pay Here financing, also known as BHPH, can have policies that vary widely from one business to another and car dealerships are no different so it’s best to ask about them upfront. Typically Buy Here Pay Here used car dealerships have had a bad reputation, and even today there are some that seem determined to exemplify and perpetuate that negative image. Thankfully there are others that are trying to change and improve the negative image that has plagued the industry by offering great products and customer service that is on par with what you would expect from traditional businesses and car dealerships.
Max Auto Sales in Lafayette is working hard to set a good example and improve the image of BHPH used car dealers. By offering interest rates for challenged credit and perfect credit that are equal to what anyone would get with a prime national lender, paired with the best used cars for every credit situation from poor to great, even programs to help rebuild your credit and reporting to the credit bureaus, combined with fantastic customer service, we believe Max Auto Sales is the best BHPH experience you can have. Just ask our customers who have purchased their 5th (yes, FIFTH!) used car with us. We think if we keep working hard we can be model for other BHPH businesses. Think about it; what are the reasons people with great credit don’t shop at a BHPH business? We think there are two reasons. First obviously is because they believe they can get a better deal elsewhere. But if the financing rates, the products, and the customer service are as good or better than other businesses offering traditional financing then why would you not shop there? We think the answer, the second reason, is one word: perception.
The negative perception that BHPH has seems to be a result of the circumstances and consequences of poor credit and high risk financing. If you have poor credit then that signals to lenders that you are high risk so you will not be able to get financed through traditional lenders. This means that the financial institutions that are willing to lend you money are taking on a bigger risk and for that consideration they are going to want a higher rate of return, or a bigger reward, and to do that they have to charge you a higher interest rate. A higher interest rate means your payments will be higher, and the amount of money you can borrow will be much less. When it comes to buying a used car, this means that you will only be able to afford a cheaper car, with higher miles, and maybe in poor mechanical condition. These cars when compared to new cars will be more likely to need repair sooner, which can sometimes lead to bad experiences when buying a car from a less reputable dealer. To make matters worse there are some used car dealers that know that those customers have limited options and hence take advantage of them by charging them way too much for a used car that is in poor mechanical condition, and stick them with a very high monthly payment for a car that won’t last more than a year. Not all, but some. That fact combined with the vicious cycle of having poor credit and getting stuck with high interest and sometimes second-rate goods has given BHPH a bad rap.
Changing a negative perception, and negative public image, is hard work. It’s going to take a change on both sides of the table. It’s going to take work, self reflection, and a determination from both businesses and customers. By trying, and striving, and being the best we can be, we can be an example of why Buy Here Pay Here is really not any different than any other lending institution. Instead of it being some big lending institution or national bank, it’s just really someone local, a person or business, who has decided to loan their own money and take a risk that you’ll pay them back; like a small, local bank making loans. And instead of having the profits and proceeds from loan interest go to other companies in some other states, or even overseas, most BHPH proceeds stay right there in their own community providing a service to those who need it. With that in mind, let’s examine what it’s going to take for the used car industry.
With regards to Buy Here Pay Here used car dealers there are a lot of different perceptions and there have been many articles written, both good and bad, about the subject such as this article on the subject of Buy Here Pay Here on Autotrader, we call on you nationwide to work hard to improve the perception of our industry. We challenge you to offer the best used cars possible for the price range. We call on you to act with integrity, to be fair and honest in all of your dealings. We know it is impossible to predict the future; to know in advance some of the issues that a particular used car will have. No one can do that. We also know that sometimes someone may choose to not disclose a known problem, to not fix a safety issue, or to hide it just long enough to get the car sold. We believe this is a “penny wise but dollar dumb” approach. You might make a little more profit short term on this one sale, but you will lose the customer for the future because next time they will come do business with someone like us, like Max Auto Sales, who will treat them well and sell them a great used car that we have inspected and repaired to the best of our ability. And from that point on they will buy all their used cars from us because of the effort we put into offering great customer service and great used cars. We work hard at getting our customers the right used car for their budget. In fact, we actually sit down with them to figure out their monthly budget to make sure they can afford the car they want! As a result, our customers get a used car that has been inspected, repaired as necessary by actual ASE techs, and detailed so it is super clean. We give them a price and a monthly payment that reflects their budget and what they can afford, and offer them the best used car we can muster for their budget. As a result our customers get a car they are happy to own and they can actually afford. Plus we help them rebuild their credit. It’s a win-win!
Customers, we are calling on you too. We are calling on you to be honest with us, and with yourselves. If you are coming to us because you have less than perfect credit, then be honest with yourself about why you have poor or even bad credit. Let’s have an honest conversation about why you want our bank to loan you $15,000 but the choices you have made have led you to have a credit score that is 328 instead of 832. Would you loan $15,000 to someone who has 3 repossessions and no job? Maybe you lost your job when oil went from $120 a barrel down to $45; Okay our bank can understand that and let’s see how we can work with you. Or maybe you had unexpected medical bills. Okay, let's go talk to our bank. But please understand how a high interest rate makes a normal $200 monthly payment into a now $350 monthly payment. Please understand that with poor credit you are going to have to accept a less expensive used car now until we can help rebuild your credit. Do the hard work now and you will get a better interest rate and a better car next time. Please understand how at least 1 out of every ten cars we sell gets repossessed and we sometimes lose thousands (yes, thousands!) of dollars on it. Do you realize how many more cars we have to sell just to break even after that? Please don’t come to us wanting the newest, best car on the market but you have bad credit and no job, and then get mad at us when the numbers just don’t work out, tell everyone that “we just didn’t want to work with you” and blame us for your past. You are not going to get the same privileges as someone who has worked hard, lived within their means, budgeted and managed their money wisely, and did whatever it took to make sure that all of their debts were paid. So we are calling on you to be honest with us so we can put together deal that is affordable for you, even if it means accepting the consequences of your past actions. It is hard for some people to do.
So let’s work together. Let’s be the best we can be, both as people, as customers, and as used car dealers. And if you have questions or would like to discuss this more, contact us and ask for Brian Leleux and I would be happy to talk to you.