The economic recession has changed a lot of things and even though it has reduced to the buying ability of people, we cannot afford to not have a car and be late for office. On the other hand, buying a car is not as easy as it used to be earlier because banks and financial institutions are no longer offering loans easily to people with bad credit ratings. So what is the solution? Buy here pay here could be an easy solution for people with bad credit ratings.
What exactly is buy here pay here? These are basically car dealerships that offer credit for buying the car. The interest rates are definitely high, but when you have no other way to meet your transportation needs, you wouldn’t mind the extra bucks. Now, some people are skeptical about buy here pay here and would tell you that the financing schemes available from such dealerships are not worth it. There might be some hint of truth in that, but there are certain advantages as well. So, let’s take a look at the different advantages and disadvantages of buy here pay here.
The advantages of buy here pay here: If you have a bad credit rating, that simply dims your chance of getting approved for a car loan. Under such circumstances, buy here pay here could be the best option that you might have.
Even though the rate of interest is very high compared to bank loans, there are some states that have actually put a cap on the uppermost limit of interest and that might protect you from overpayment. Being a customer, you would also be covered under warranty lights and that would protect you from odometer fraud as well. You are also entitled to take along with you an expert in used cars and he would be able to run a thorough inspection of the vehicle in question. That way, you would be able to make sure that the vehicle you are buying would meet your transportation needs and the benefits are in accordance with the price you pay.
Disadvantages of buy here pay here: you need to understand that if you have a bad credit rating, people are going to take advantage of that and the interest rates are going to be steep. Of course you can negotiate with the dealer, but as a general rule, the interest rates of buy here pay here are 15 to 20% higher compared to bank interest rates.
A regular used car dealership is bound by policies that would protect you against any kind of fraud and the laws are usually in favor of the customer. But, in the case of buy here pay here, since that credit rating rules don’t apply, you would have to do your own diligent research before you put your money on the table. There have been instances than buy here pay here dealerships have tempered the odometer of the car and the customers were made to think that they were buying a competitively less used car. So, the risk is always there – you need to do your homework and the responsibility of protecting yourself lies with you.