A Buy Here Pay Here (BHPH) dealership is a type of used car dealer that acts as both the seller and the lender. Instead of arranging financing through a bank or credit union, you make your car payments directly to the dealership itself. This model is specifically designed for buyers with poor credit or no credit history who struggle to get approved for traditional auto loans.
The core trade-off is accessibility for cost and control. Because BHPH dealers take on the high risk of lending to subprime borrowers, the terms are often less favorable. You can typically expect higher interest rates, a requirement for a significant down payment, and older vehicles with higher mileage. A key feature of these lots is the use of payment reminder technology, often a GPS tracking device or a starter interrupt device, installed on the car. This allows the dealer to locate or disable the vehicle if you fall behind on payments.
| Characteristic | Typical BHPH Dealership Feature |
|---|
| Financing Source | In-house, direct from the dealership |
| Target Customer | Individuals with bad or no credit (subprime) |
| Interest Rates (APR) | Significantly higher than traditional loans, often exceeding 20% |
| Down Payment | Often required, can be 10-20% of the vehicle's price |
| Vehicle Age & Mileage | Older models, typically over 7 years old with 80,000+ miles |
| Credit Check | May perform a soft check or none at all; focus on income verification |
| Payment Technology | Frequent use of GPS tracking or starter interrupt devices |
| Payment Schedule | Often requires weekly or bi-weekly payments in person |
While BHPH lots offer a path to car ownership when few other options exist, it's crucial to read the contract meticulously. Understand the total cost of the loan, including all fees, and be aware of the dealer's repossession policies. Always try to get the vehicle inspected by an independent mechanic before purchasing, as these cars are often sold "as-is" with no warranty.
