Understanding the difference between a new car dealer that offers poor credit car loans and a buy here pay here dealer

Credit repair

Applicants with bad credit often think there are no differences between a tote the note dealer and a new car dealer that offers terrible credit auto loans.

We should know since we've been involved with bad credit auto sales 1992 here at Auto Credit Express. We even designed a web site so that applicants with poor credit can learn about issues such as FICO scores and approved auto loans as well as today's topic, the difference between buy and pay here dealers and new car dealers that offer bad credit auto loans.

Tote the note dealers

When you visit a buy here pay here dealer, you arrange a car loan and make payments right at the dealership. You do this because your credit is approved by the dealer instead of a third party, such as a bank or credit union.

Although some dealerships that offer in-house financing will accept weekly or bi-weekly payments either by phone or online, most require that you physically bring your payments in to their location.

How dealers differ

In some ways, there isn't much difference between tote the note and traditional car dealers. In fact, a growing number of franchised new car dealers have begun to offer services normally associated with car dealerships that offer in-house financing. You might not see "Buy Here Pay Here" printed on their billboards, but phrases such as "We Finance" may tell you that they offer this option.

The biggest difference between them is in the shopping experience. At a traditional new car dealership, the discussion about financing occurs once you've picked out your vehicle. At that time, the finance manager will help you explore your payment options.

At buy and pay here dealerships, the process is usually reversed. First, you'll talk about your credit situation. Once the salesperson understands it, you'll then be shown the cars that fit your credit profile.

Highs and lows of buy here pay here dealers


1. Available cars and available credit

The most important benefit of in-house financing dealerships is that they give most bad credit buyers the opportunity to get transportation. In some cases, these dealerships aren't just an option — they may be the only choice if your credit is really bad.

2. Trade-in flexibility

Buy and pay here dealers are usually more flexible when it comes to accepting trade-ins on older cars. That's because these dealers have traditionally gotten long-term use out of cars that a typical new car dealer will not accept. Since they're more likely to find a buyer for an older vehicle they're more likely to consider one as part of a down payment.


1. Very little chance of establishing your car credit or improving your FICO scores.

One of the best ways to rebuild car credit is to make timely payments on a car loan. But at buy here pay here car dealerships, even if you make all your payments on time this probably won't happen since most don't report loans or payments to the credit bureaus. Since a higher percentage of these loans end in repossession, this forces many buyers to continue the cycle of older cars and high interest rates.

Try us

With a credit score below a 640 FICO or trouble getting a traditional auto loan, you should still only consider a buy here pay here dealer after you've explored another option.

At Auto Credit Express we help people with bad car credit find a dealer for their best chance at approved auto loans.

So if you're serious about getting your auto credit back on track, you can begin now by filling out our online auto loans application.