If you’re short on credit (or the credit you have isn’t exactly praiseworthy) but you need a car, you’ll almost certainly come across Buy Here Pay Here dealerships as you research your options. After all, getting approved by a bank or credit union with a low score is tough, and even when they say yes, the terms usually aren’t pretty. You could always pay cash, but that isn’t realistic for most people. Instead, you need a way to pay for your car a little at a time, and Buy Here Pay Here dealerships fill that need by financing their cars themselves. However, just because an option is available doesn’t mean it’s your best one. Do your research and pay close attention to these Buy Here Pay Here disadvantages . . .
5 Buy Here Pay Here Disadvantages to Watch Out For
1. You’ll be hit with high interest rates.
Buy Here Pay Here dealerships lend to people who’d have a hard time getting a loan anywhere else, and they make you pay for the privilege. Interest rates of 20% or more are common, and many states allow rates as high as 35%. Plus, many dealerships require weekly or biweekly payments timed to your paycheck, which can be frustratingly frequent and leave you very little wiggle room.
2. You’ll pay far more than the car is worth.
At many Buy Here Pay Here lots, not only do the vehicles tend to be older and higher-mileage, but the price often has little to do with what the car is actually worth. A Los Angeles Times investigation found that these dealers frequently mark cars up 200% or more over what they paid. That means the price reflects how much the dealer wants to collect from you, not how much the car is worth. Before you agree to anything, look up the car’s value on Kelley Blue Book or Edmunds.
3. You probably won’t get much of a warranty.
What if the car breaks down and the repair can’t wait? Many Buy Here Pay Here cars are sold “as is.” If a warranty is offered at all, it’s often short and limited, so the repair bill is on you. Sometimes that won’t be a big deal. But if the repair is pricey and your budget’s already tight, you might struggle to cover both the shop bill and your regular car payment.
4. Your car could be repossessed fast.
Many Buy Here Pay Here dealers install GPS trackers or starter-interrupt devices in their vehicles. Fall behind, even by a little, and your car could be disabled or repossessed quickly. Even after a repossession, you may still owe money on the loan.
5. Your payments may not help your credit.
If you have bad credit or no credit, you’re probably hoping to build a respectable score someday. Making regular payments on a loan seems like a good way to do that. Unfortunately, many Buy Here Pay Here dealers don’t report on-time payments to the major credit bureaus, so all those payments won’t help your score. Before you sign, always ask whether the dealer reports to all three bureaus.
Is There a Better Option?
So what do you think: is a car worth all of these disadvantages? If you decide it’s not, you may want to shelve the idea of a Buy Here Pay Here dealership and look into rent-to-own instead. At Auto By Rent, a rent-to-own dealer in Springfield, Missouri, we help drivers get into quality vehicles regardless of their credit history. We also offer warranty and insurance options, so one surprise repair doesn’t have to derail your budget.
Ready to learn more? Get started with a free quote online, call us at 417-447-7979, or stop by our lot at 1835 E. Chestnut Expressway in Springfield.
We look forward to hearing from you!
Originally published March 17, 2021 · Updated November 2026