When you have bad credit or no credit there aren’t that many options other than buy here pay here. The truth is that not all buy here pay here dealers are created equal. Some of them care about their customers while others only want your money. The trick is to find the ones that care about not only their customers but also their own inventory. While shopping for buy here pay here dealerships here are some common mistakes you should avoid.
1. Payments: Everyone wants the lowest payment possibly but what if I told you the more you paid the more money you’d save? A low $200 payment spread out over a long period of time will actually end up costing you more money in the long run than a lower payment. There are some buy here pay here dealerships that will penalize you for paying more on a monthly basis. Avoid these places as they are only interested in your money. Find the used car dealers that allow you to pay more every month over your set payment. Paying more saves you money on interest and fees over the long run. Some of them may even give you deep discounts for paying more and you could end up saving even more money.
2. Credit reporting: If you have bad or no credit a goal of yours should be to attempt to rebuild it. Having a good credit score can save you lots of money over your life time buy here pay here dealerships aren’t required to report your payments but they should. Reporting payments helps rebuild your credit history. It’s important that you find a buy here pay here dealer that does this. There are a lot of people who get impatient and end up buying a car and once they’re done paying it off truly have nothing to show for it.
3. Repairs: The sad truth is not every buy here pay here dealership cares whether or not their cars run. There are some dealers who may want to just unload their bad inventory. This isn’t everyone as there are some quality places that take the time to service and fix all of their inventory before putting it up for sale. Find the places that fully service their cars, trucks or SUVs before putting them up for sale. While most places are “as is no warranty” there are some dealerships that will protect you for a period of time if something happens. I’ve known dealers to put their customers in different cars if the one they bought ended up breaking down shortly after purchase. I’ve known others who offer to fix it under their own dime as well. These are the buy here pay here dealerships you should look for.
4. Down Payment: The down payment is one of the most confusing aspects of of buy here pay here. Most people want to put the least amount of money down as possible. I don’t blame you but this is often a mistake. The down payment goes towards the balance of the vehicle up front. Some people get confused and think that that money goes into the pocket of the car dealership. When a dealership sells you a car they will often have to pay the taxes for you up-front. Some also offer gap insurance, which protects you just in case you get into a car accident. They don’t make money from gap insurance as it’s something that protects both customer and dealership at the same time. There are also some car dealerships that will defer your car payment up to 60 days and also spread out your down payment over 45 to help you get caught up.
The truth of the matter is the more money you put towards the car up front the more money you’ll save over the long run because it reduces the monthly payments. Because you have to pay interest on your car note, the more money you pay up front the less interest you have to pay over time.
5. Low Down payment or deferred down payment: While it’s always better to put more money down not everyone has a lot of money in this economy. There are some places that will give you a certain period of time to come up with more down payment while you drive off with the car and continue on with your life. Depending on the place they may off a $99 down program or a $200, $300 or $400 down program to help you get caught up with bills.
When searching different buy here pay here car lots for the right car it’s important to not overlook these things just because you want a specific car. A lot of buy here pay here dealers will have a wide range of vehicles to choose from and that will fit your budget. I’ve known customers to rush through the buying process and end up with a piece of junk at the end of the day and have nothing to show for it. You want to protect yourself as much as you possibly can, as there are lots of people who end up with nothing to show for it at the end of the day.
Paying a car off is a big commitment that will pay off big time for you over the long run. Finding the right buy here pay here dealer is a good way to rebuild your credit history and plan for the future.