Dangers of “Buy Here, Pay Here” Car Lots


Dangers of “Buy Here, Pay Here” Car Lots

Signing Documents

When you want to buy a new car, “buy here, pay here” car lots can be enticing. On the surface, it looks like they are offering good prices for quality vehicles. When something seems to be too good to be true, though, there’s most likely a catch. You might get yourself into an auto loan that you’ll regret, or the consequences could even be much worse.

Here are some of the dangers of “buy here, pay here” car lots and why you should be wary of these business models.                                                                             

High-Interest Rates

These businesses offer financing in the shortest time frame possible. Some don’t even need to check your credit score to provide you with a loan to get a new car. However, these lenders are confident in this system because the interest rates are high. They earn much more than traditional lenders and dealerships.

That means, you could be paying much more than necessary to get your new car.                                                                                                                                         

Puts Your Credit Score At Risk

While it doesn’t require a good credit score to get these auto loans, it doesn’t mean the dealership won’t report them. If you ever miss a payment or have a problem, they could easily submit a report to one of the major credit bureaus. This will cause your credit score to take a hit that you won’t see coming.

On the other end of the spectrum, some businesses won’t even acknowledge the fact that you’re paying on time. The loan you got will not build your credit score, leaving you in the same spot you started with. The only difference is that you paid more than necessary for the car.                                                                        

They Don’t Have to Follow MSRP

When you go to a traditional dealership, you’ll often get a price based on the car’s value and the recommended price set by the manufacturer. With “buy here, pay here” car lots, they don’t follow the same protocols. They could set the price they want and put up a good sales presentation to convince you that it’s cheap. Coupled with interest, you could end up paying thousands of dollars more for a car that just isn’t worth that much.                                                                                                                                                                                     

Payments Can Be Inconvenient

Some dealerships have set up weekly or biweekly payments which can affect your spending power. Instead of a once-a-month plan, it will remove money from your account in shorter intervals. Not only that, but it may also be a way to increase the rate at which interest accrues. If you miss one payment, the debt can add up.                                                 

Always Consider Your Options

These business models can be appealing because they offer you a quick way to get what you want: a new or new-to-you car. However, you need to take a step back and consider why they’re offering it. Dealerships like this can tug on your emotions, causing you to put logic on the backburner. Without considering the risks, you could end up on the wrong side of a raw deal.

Please sit down with your credit union first and see how they can help. Even if you have bad credit, you can still find better opportunities that will work for you.


  1. https://roadloans.com/blog/buy-here-pay-here-dealerships
  2. https://www.creditkarma.com/auto/i/buy-here-pay-here


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