Buy-here-pay-here car dealers offer financing for buyers who can’t obtain bank financing, but require higher down payments, inflated interest rates, and often sell vehicles at a higher price. Buyers must maintain full coverage insurance and pay for repairs themselves. In the event of a totaled vehicle, the dealer may receive the insurance check and expect the buyer to pay the remainder. Weekly payments are often required in person.
A self-financed car dealer operates a buy-here-pay-here car sales lot. Serving buyers who may not be able to obtain bank financing for one reason or another, Buy Here Pay Here holds title until the vehicle is paid for. Some of the disadvantages of buying a vehicle from a buy here pay here dealer are the generally higher down payment required, as well as high weekly payments and inflated interest rates. Many times, vehicles on this type of lot command a higher price than a similarly equipped vehicle on a traditional lot.
For the prospective buyer who cannot obtain typical vehicle financing, the dealer buy here pay here is often the only option to purchase a vehicle that sells for more money than the buyer has available. The buyer rarely has to undergo a lengthy application for the vehicle of their choice, and often just completing a simple credit application listing address, pertinent information from employer and other family members is all that is required, along with a down payment, to bring a vehicle home Most vehicles available on the self finance type lot are sold as-is, which means the vehicles do not come with any warranty and all necessary repairs must be done by the buyer at his own cost.
As with bank or manufacturer financing, the buyer of a buy here pay here vehicle must maintain full coverage insurance on the vehicle until such time as the vehicle is paid off in full. This is to ensure that the vehicle will be paid for in the event of an accident or other event that leaves the vehicle destroyed. A vehicle deemed totaled by the insurance company is a vehicle that will require more money to repair than the vehicle is worth on the open market. In this case, the insurance company will more or less buy the vehicle from the owner for the fair market value of the vehicle before the accident. There is no guarantee that the insurance payment will pay for the vehicle.
In some cases, the buy here pay here dealer will receive the entire totaled vehicle insurance check and expect the buyer to pay the remainder. This happens because the price of the vehicle is typically higher than the fair market value at the time of purchase. Often the lot will add the remainder to the price of another vehicle on the lot and sell it to the buyer in payments to satisfy both vehicles. Typical weekly or bi-weekly payments made to a lot buy here and paid here are often required in person. This is so the dealer can monitor the vehicle if a customer fails to pay on time.
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