The Buy Here Pay Here Industry is Booming in Today’s EconomyJanuary 23
Small car lots that finance their own cars are cashing in with the recent economic downturn in America. Car shoppers coming out in droves with the promise of auto financing despite their recent credit set backs are finding that the offer of guaranteed auto financing to leave a lot to be desired.
Sharply contrast to what many expect at these small privately owned dealerships, it’s a tough proposition to obtain a car at a reasonable price. Industry reports show that buy here pay here car lots have proven to charge as much as 400% more than what a vehicle is worth at retail. Selling these cheap cars at huge mark-ups is based on the desperation that many consumers have with the inability to obtain normal prime financing for a car.
As one would expect, these types of dealerships are in the business of making money, as any business is. They do a good job of it too, charging thousands of dollars in finance charges above and beyond the already heads over retail prices for vehicles.
Should you be considering the use of one of these establishments because you’ve been turned down for financing elsewhere, there are a few things that you should remember.
1) Don’t take the first deal that you’re offered. Always compare the price that you’re being asked to pay with NADA retail prices, allowing for the appropriate mileage adjustments. The condition of the vehicle is a major factor as well, so if it’s not in good shape, don’t pay anything near retail.
2) Have a mechanical history report pulled for the car in question. You may be surprised at what you find in these money saving reports available from such places as Carfax and Edmunds.
3) Explore other finance options first. If you have a snowball’s chance of getting approved at a local bank, even at a higher rate, you’re much better off using a real lender. This will help you to improve your credit score, as most buy here pay here dealerships do not report anything to the major credit bureaus.
Best of luck and do your best to be cautious, making a well-informed decision prior to purchase.
23 Jan 2010 | 12:08 pm | Autos
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