Buy here pay here (BHPH) car lots are typically independently owned and operated businesses, where the dealer is the lender. These auto financing locations only deal with used vehicles and are known for quick service.
BHPH dealers often have a bad reputation too, though. Many consumers cite high interest rates and multiple payments a month as downsides. But, these special finance dealers can be just what you need in a pinch if you have bad credit and need a car.
Facts About BHPH Dealers
BHPH dealers are a good option for borrowers that need a vehicle without the wait or the hassle of getting financed by a third party based on your credit. But the process, perks, and drawbacks of BHPH financing are different from that of other dealers.
Here's a quick reference of what to expect from a BHPH dealer:
- Only sell used cars
- Selection may be limited to older vehicles with high mileage
- Vehicles came as-is (no warranties or service contracts available) at most BHPH dealers
- May not be as hardline on credit score requirements as other lenders
- Typically quick process
- May not report your timely payments to the credit bureaus
- Many skip the credit check when determining eligibility
- Typically come with high interest rates
- May require a large down payment
BHPH dealers, also known in some parts of the country as tote the note dealers, are independent dealers who both sell and finance cars. They don't give you a loan to go and purchase a vehicle somewhere else. If you’re eligible for vehicle financing with a BHPH dealer, you choose a car off their lot.
BHPH Dealers Are Different
Unlike other bad credit auto lenders, such as subprime lenders, BHPH dealers don't always check your credit. Subprime lenders base your loan qualification on your credit score and additional factors that show your ability, stability, and willingness to repay it. Since BHPH dealers sell and finance their own cars, they’re likely to skip the credit pull entirely.
This makes them a go-to choice for borrowers who have little to no credit, or who've already been turned down by a subprime lender. Since not all BHPH dealers look at your credit score and reports, they generally base loans on your income and ability to make a down payment.
Typically, they require you to make a down payment that can be as much as 20% of the vehicle's selling price. They also require proof of income, typically with your most recent check stub(s).
When you're working with a subprime lender, income requirements typically fall around $1,500 to $2,500 a month, before taxes, from a single employer. BHPH dealers are more lenient, with varying minimum income requirements. They may not require all of your income to come from one source, as long as you can prove you have the cash flow to make your payment.
Additionally, tote the note lots may require you to make more than one payment a month. This could mean paying weekly, or bi-weekly, depending on your pay schedule.
Bad Credit Car Dealers
When it comes to the world of auto financing there are many different ways to go about getting a car. The choices you have, and the one that's right for you typically depend on your credit situation. If you have good credit on the FICO credit scoring model, usually considered a score of around 670 or higher, then you're likely to have more lending opportunities and a greater range of vehicles and dealerships to choose from.
As you start to get into lower credit score ranges, your auto loan opportunities can drop – not all lenders have the ability to finance bad credit borrowers. Those that do include subprime lenders that work through special finance dealerships, the captive lenders of some automakers, and in-house financers, such as BHPH dealers.
What if I Don't Qualify at a BHPH Dealer?
Qualifying for an auto loan, especially when your credit score isn't the greatest, can be tough. BHPH lots are sometimes seen as a last resort – or as the only choice – a borrower with bad credit may have. This is rarely the case, though.
Many borrowers who have been turned down in the past, or who have low credit scores often assume that they have to go to a tote the note dealer because financing in a more traditional sense is out of the question. While this may be true in some cases, it's not always the fact of the matter.
In order to know what options are available to you, start by checking your credit score and reports yourself. You can take advantage of free weekly credit report viewing at www.AnnualCreditReport.com now through April 2022.
This allows you to see what the lenders and dealers are seeing when they look at your credit profile so that you know if you truly need to visit a BHPH lot or not. If your credit score falls below 670, chances are you need special financing. But, if you're turned down by a BHPH dealer, you're not always out of options, and can always look for something affordable from a private seller to get you through until you can qualify for an auto loan.
And, subprime lenders may still be able to help you get into a vehicle, even with less than perfect credit.
Ready to Get a Move on a Car Loan?
The options are out there if you know where to look for a car loan with poor credit. The choices you have aren't always easy to find yourself, though, especially if you're not sure where to start looking. That's where we come in. Auto Credit Express has built a nationwide network of special finance dealerships that are signed up with subprime lenders.
If you're not sure where to turn, you can start right here by filling out our fast, free, no-obligation auto loan request form. We have over 20 years of experience matching bad credit borrowers to the local dealers that can help, so don't hesitate – get started toward the car loan you're looking for!