With the economy the way it is today, more and more people are finding it difficult to obtain car loans and financing for a vehicle that they have found from the used cars for sale by owner ads. Many may need cheap cars for a new job or need reliable transportation to and from medical facilities. Whatever the reason, the people who need a car but cannot obtain financing through traditional lending institutions usually end up turning to buy here pay here car lots. While some may think this a bad thing, others consider it a good choice if you’re careful. Here are some pro’s and con’s to consider before purchasing a car from such a dealer.
For beginners you need to know there’s a reason a car dealer can offer to carry the financing of a car for you. In some instances, the dealer may increase the price of the car that they’re financing for you. So you end up paying more for the car than you would through a traditional dealer.
Other dealers may hit you with a very high interest rate on the car you buy. While the price of the car may sound reasonable, the interest rate could be so high that by the time you get it paid off, you’ve paid hundreds or maybe thousands more in interest than you would have through traditional car dealers.
And there are some buy here pay here car lots that will increase the asking price of the car and charge you a high interest rate to finance the automobile for you!
But on the flip side, I believe most buy here pay here car lots are honest. They do have the right to charge a reasonable price for their cars and a reasonable interest rate on the loans they carry for you. And yes, those interest rates will probably be higher than a traditional lenders interest rate. After all, you’re probably a credit risk to begin with or you would have went through a traditional lending institution like one of the automakers lending departments, a bank or credit union.
I once needed help buying a used pickup. Since my credit was dinged, I ended up buying it from a buy here pay here car lot. This particular lot reported my on time payments to the credit reporting bureau’s. This went a long way in helping me increase my credit score. This is another bonus of buying from these lots, just make sure they will report your on time payments, some will, some won’t! All in all not a bad deal for buying cheap used trucks.