What is Buy Here, Pay Here Financing?

Low credit scores can make it hard to get a loan. Qualifying for a car loan, in this case, might require paying more toward the down payment or paying higher interest rates. However, buying a car is a necessity for most people – especially those who need to drive to get to their workplace.

If you find yourself in this situation, a buy here, pay here financing option from a car dealership is a good option. Here’s what you need to know about this financing arrangement.

What Is Buy Here, Pay Here Financing?

Buy here, pay here (BHPH) is an auto financing option where you finance the purchase of a vehicle from the same place you buy it.

Usually, dealerships offer this option to car buyers to make the purchasing process simpler.

When you finance your car through the dealership, you don’t have to go through a third party, like another lender. Some dealers offer these loans without a credit check, making them more appealing to those with bad credit. This type of financing is otherwise known as in-house financing, subprime car loans, poor credit or bad credit auto loans, and no credit loans.

How the Process of Buy Here, Pay Here Financing Works

If you plan to finance your vehicle purchase (as opposed to paying the full value in cash), the dealership might offer a buy here, pay here financing option. This loan type is different from traditional dealership financing, in which the loan is obtained from a third-party lender with which the dealer has an existing relationship.

When you pick a buy here, pay here loan, your payments directly go to the dealership. You might be able to get this type of auto loan without a credit check. This can be ideal for those who have a less-than-perfect credit history. For some buyers, BHPH financing might be the only available option if they can’t qualify with other auto loan lenders.

A financial professional will work with you and verify your residence and income with a pay stub. They will also ask for your contact details so that they can connect with you if there are any issues during your loan term.

You will have to make a down payment, irrespective of whether you use subprime financing or finance using a traditional lender. This is the amount that you put toward the value of the car.

Some lenders require buyers to put down a fixed percentage of the down payment, while others may be more lenient. However, the amount is usually non-negotiable for those with poor credit.