Buy Here Pay Here is Big Business

Buy Here Pay Here car dealerships have grown by leaps and bounds in recent years due to the recent economic downturn in the U.S. and become a multi-billion dollar industry. In 2001, Buy Here Pay Here sales totaled about 1.2 million vehicles and accounted for about 4.1% of all dealer sales. Just ten years later, market share for these small dealerships has more than doubled and accounts for almost 9% of all used car dealer sales.

What Is A “Buy Here Pay Here” Used Car Lot?

Buy Here Pay Here means the car dealership extends in-house and on-site credit to the purchaser rather than conventional financing such as a bank, credit union or finance company. You buy it at the dealership and you pay for it at the dealership. This allows the dealership greater flexibility in who they approve for credit but to the consumer it also can mean exorbitant interest rates, high down payments, well-used cars to pick from, increased frequency of payments and a much higher risk of repossessing the vehicle if a payment is missed.

What CAN BE GOOD About Buying From A Buy Here Pay Here Car Dealership?

If you desperately need a car and have bad credit, no credit, a foreclosure, recent bankruptcy or a record of late payments, most Buy Here Pay Here dealers will still extend credit to you if you have a job. And, they may be more flexible than traditional dealerships when it comes to trading in your used vehicle – especially if it’s a high mileage or an older model vehicle.

What CAN BE BAD About Buying From A Buy Here Pay Here Car Dealership?

BUYER BEWARE! Here are some potential RISKS to consider:

Price gouging (paying two to three times more than a vehicle is worth) happens all too frequently because dealers prey on consumers who are desperate to have a car and willing to pay far more than a car is worth “just to have transportation.

The price of a vehicle is usually not negotiable and down payments are always required.

The higher down payment you are asked to put down on the vehicle often reflects the approximate amount that the car is really worth. Buy Here Pay Here lots often finance the profit they expect to make and not the car itself.

Don’t sign an arbitration agreement. An arbitration clause may be on the front or backside of the purchase agreement or it may be a separate document the dealer requires you to sign. An arbitration clause kills your right to go to court no matter what the car dealer does to you. If the car dealer is afraid to let you go to court, then you should be afraid of the car dealer.

You may grossly over pay if you choose a rent to own or lease to own used vehicle The down payment may be the dealer’s investment in the car. And, many agreements cancel the “to own” feature if the payment is even one day late but you may not know that until the end of your contract and you ask for your title only to be told you didn’t honor the terms of the contract.

The used cars sold by these dealers typically have an average odometer reading of 90,000 to 110,000 miles with absolutely no warranty. If something goes wrong, you will have to pay the repair bill yourself.

The car may look good on the outside, but may have shoddy repairs or undisclosed prior damage that cannot be seen. You have to be very careful.

Buy Here Pay Here dealer cars may include flood cars and/or cars damaged by natural disasters such as tornados, hurricanes, etc., so be sure to ask.

The dealer may require that loan payments must paid in cash and made in person at the dealership. Sometimes they give you a receipt and sometimes they do not. Always get a receipt or you may not be able to prove you made the payment at all.

The frequency of loan payments is often weekly which can lead you into thinking you are paying less per month rather than more. Be careful.

Buy Here Pay Here car lots rarely report your payment history to the credit bureaus resulting in no benefit to your credit score for your timely payments. If you are trying to fix your credit record, a Buy Here Pay Here dealer may do nothing for you at all.

What CAN BE UGLY About Buying From A Buy Here Pay Here Car Dealership?


Dealers often charge exorbitant or even illegal high interest rates in excess of 25%. You may already have paid too much for a vehicle and then end up paying twice for the car – once for the loan amount and then once for the financing.
Here’s an example from a real case: Amount financed: $17,611.29 @ 25% interest with 72 payments at $474.08. When the loan (including interest in the amount of $16,522.47) is finally paid off, our client will have paid $34,133.76 for a 2009 model year car!

The dealer will hide a GPS device under the car so it can be easily and quickly repo’d if your payment is even one day late

The dealer can install an immobilizer in the car that will disable the car if you’re more than a couple of days late with a payment. It may not just quit in traffic but when you shut it off, it will not re-start. The only way to get it re-started is to have it towed back to the dealer, pay your loan up to date as well as the late charges and then get it re-enabled to run again.

May car dealers are in business one day and out of the business the next which you leaves you little recourse if you want to take legal action.

Do I have other options?

Yes! If you have bad credit, you don’t have to buy from a dealer that finances their own cars. Shop around and you will find many of the larger car dealerships have access to legitimate lenders who handle credit risk consumers. Make sure you get real auto financing from a reputable dealer. Don’t settle for less and DON’T WASTE YOUR MONEY.

Bad credit or no credit should not prevent you from getting a good vehicle. And, bad credit or no credit will not prevent you from getting a good attorney.

How to protect yourself and your legal rights: If you think you have a problem with a vehicle purchased from a Buy Here Pay Here used car lot, contact the used car lemon law attorneys at Burdge Law Office at 888.331.6422. Burdge Law will protect your used car rights because we have extensive experience filing claims and lawsuits against Buy Here Pay Here car dealers and know the used car laws that will get you the results you are seeking.