Imagine this: Your credit report appears to have been shredded, and your car has suddenly died. Someone needs to give you a ride soon. What are your options? I bet that “Bad Credit Car Dealerships” and “Buy Here Pay Here” (BHPH) are at the Freedom Auto Sales. You can still get a set of keys from either of them, regardless of how dingy your FICO score is. But which one is more convenient in terms of saving money? No need to resort to insincere sales pitches; let’s get our hands dirty and compare.
To start, there’s Buy Here Pay Here, which is similar to the seedy corner restaurant of auto loans. Just you and the merchant, no intermediaries. The dealer acts as the intermediary between you and the lender, protecting your money. All warm and fuzzy, isn’t it? Even with terrible credit, you’ll still be able to drive away without any interference from the bank. On the other hand? The nosebleed area is a common place for interest rates to go. If we’re being really honest, the vehicles may have been around for longer than your grandma’s favorite soap drama.
Credit Issues Things are handled differently by car dealerships. They partner with external lenders and focus on helping customers with, shall we say, “colorful” credit. You might get a lower rate if you wade through the approval process, which might require a little extra paperwork. Plus, there are fewer rusty parts in their cars, so they seem to be more recent. Still, you might feel the pinch when dealing with stringent lenders who want larger down payments or shorter loan periods.
Who wants to spend more money than necessary? So, let’s talk about saving. Although BHPH lots have a quick approval process, the exorbitant interest rates can steal thousands of dollars from your paycheck over the course of the loan. In the event that you are late with a payment, the dealer may impose severe consequences, such as the installation of trackers or even remote kill switches. Going to the club won’t be fun.
If you can negotiate a somewhat lower rate with a bad credit dealership, you can end up saving a lot of money. Getting accepted is the catch. A more lenient loan agreement may be possible if your credit isn’t in utter disrepair. Eating that humble pie and putting in the time with the paperwork may not be easy now, but you might be grateful to yourself in the long run.
I have a simple question for you: would you like to go uphill with BHPH interest or fill out additional paperwork at a dealership for bad credit in the hopes of paying less? That hassle-free, instant vehicle is worth it to some. Some people just need a little patience.
In the end, what is the result? You can end up spending a pretty penny on the fastest option (BHPH). While a terrible credit dealership may bring temporary embarrassment, they will ultimately benefit your bank account in the long run. No matter what you do, be sure to read the small print. There are no easy ways out, but if you’re determined, you can save money and maybe even avoid regret in the long run.