Credit Center: Learn

What does "Buy Here Pay Here" mean?
Buy Here Pay Here (BHPH) financing means that you arrange a loan and make payments on it at the dealership. You purchase the car through what's referred to as in-house financing versus through a third party, such as a bank.

Instead of making monthly payments to a traditional lender, you make weekly or bi-weekly payments at the dealership. Although some BHPH dealerships will accept payment by phone or online, many require that you physically bring a check or cash to their location. You therefore "buy" the car at the dealership and "pay" on the loan at the dealership.

What's the difference between a BHPH dealership and a traditional dealership?
Depending on the dealerships you visit, very little. In fact, many traditional new and used car dealerships have started to offer BHPH financing as an option. You might not see "Buy Here Pay Here" written across the windshields of their cars, but phrases such as "We Finance" may indicate that option is available.

The key difference between a traditional dealership and one that specializes strictly in BHPH financing lies in the shopping experience. At a traditional dealership, the financial conversation is often the last part of your discussion. After you've seen a few models, asked a host of car questions and possibly test driven one, the dealer will help you explore payment options.

At a BHPH dealership, the process is usually reversed. The dealer will ask you a series of questions, possibly run a credit report and invest in understanding your credit experience before showing you available cars. Then, with your monthly payment range and down payment information factored in, the dealer will show you cars that fit your financial situation.

Who should go to a BHPH dealership?
BHPH dealerships are primarily designed for shoppers who may have experienced significant financial bumps and bruises. If your credit score is on the lower end of the scale or if you've had trouble getting an auto loan, a BHPH dealership should be one of the places you visit during a car search.

What are the benefits of BHPH financing?
1.   Available cars, available credit
The most important benefit of BHPH financing is that it gives credit-challenged people the opportunity to get much-needed transportation. In many cases, BHPH dealerships aren't just an option — they may be the only option when someone has been turned down by traditional loan institutions.

2.   Opportunities to improve credit
One of the ways to rebuild a credit history is to make timely payments on an installment loan. If you consistently make payments on a BHPH car loan, many dealers will report that positive behavior to the credit reporting agencies. Over time, your credit score can improve. Make sure you ask the dealership if reporting is a policy they follow.

3.   Trade-in flexibility
BHPH dealerships tend to be more forgiving when it comes to accepting trade-ins on older model cars. That's because these types of dealerships understand the value and benefit of getting long-term use out of cars that many traditional dealerships would not accept. They are more likely to find a buyer for your car and thus more likely to take it as part of a trade-in.

To learn more about your possible options, use the Car Credit Wizard. This tool can estimate your credit level and get a list of dealers who are equipped to help you.