There are many misconceptions about the Buy Here Pay Here industry- yet many stem from outdated information and the rest simply are not based on fact.
While a delinquent payment to a Buy Here Pay Here can result in late fees or even repossession in some cases, many other financial institutions charge late fees and seize collateral as well, and some at an even higher rate.
Many successful dealerships know that adding an additional burden of a late fee onto financially struggling customers might just tip the cart, and the customer could wind up giving up on paying the principle and interest payments.
Reselling vehicles after repossession takes time, and good dealerships know that its often much more in their financial interest to meet the customer who is attempting to make payments halfway and not make repossession a first priority.
Far from the rule of expecting to pay 25-30% interest at a buy here pay here car lot, the true interest rates vary from 12% to a bit above 20%- these vary from dealership to dealership and state to state. Relative to the average interest rate of FICA scores below below 549 of 17.9%, this doesn’t seem at all out of bounds.
The myth of a high down payment have turned many away from buy here pay here dealerships. Certainly, in the old days, many buy here pay here dealerships would attempt to get a down payment close to what they payed for the vehicle, but this simply isn’t true today.
Most of the bhph car lots in Any Credit Car Connection’s dealer network have $500 down programs, with some for as little as $299, $199, or $0 down. These dealerships understand that in many situations, without a reliable way to get to work, the customer has little cash to work with up front and are just trying to keep their heads above water.
With many laws such as Unfair and Deceptive Practices laws, Risk Based Pricing Rule, and Fair Debt Collections Practices Act to name a few, the buy here pay here industry is more regulated than ever, and the notion that working with the customer at all stages results in a better financial outlook for both parties is commonly held in practice.