Why Established Brands Are the Safer Bet
When shopping for a used car, you might come across buy-here pay-here (BHPH) dealerships. These establishments often target consumers with poor credit, promising easy financing options. However, beneath the surface lies a web of potential risks that can leave buyers in financial distress. Let’s explore why opting for larger, established brand dealerships is generally a safer and more economical choice.
1. Higher Interest Rates and Unfair Loan Terms
BHPH dealerships typically charge exorbitant interest rates, often reaching up to 30% APR or more. In contrast, established brand dealerships usually offer more competitive rates, especially for those with decent credit scores.
Example: A $10,000 car financed at 25% APR through a BHPH dealer for 48 months would cost about $18,000 in total. The same car financed at 6% APR through a reputable dealer would cost only about $11,250.
2. Lower Quality Vehicles
BHPH lots often stock older, high-mileage vehicles that may have underlying mechanical issues. Established dealerships, on the other hand, typically offer certified pre-owned vehicles that undergo rigorous inspections and come with warranties.
Evidence: A study by the National Independent Automobile Dealers Association found that vehicles sold at BHPH lots are, on average, 8 years older than those sold at traditional dealerships.
3. Limited Vehicle Selection
BHPH dealerships usually have a smaller inventory, limiting your choices. Larger brand dealerships offer a wider range of makes and models, increasing the likelihood of finding a car that suits your needs and budget.
Practical Example: While a BHPH lot might have 50-100 cars, a large brand dealership could have 300-500 vehicles on-site, plus access to thousands more through their network.
4. Lack of Consumer Protections
Many BHPH dealers operate in legal gray areas, potentially skirting consumer protection laws. Established dealerships are more likely to adhere to strict regulations and offer standardized contracts that protect both parties.
Evidence: The Federal Trade Commission has taken action against numerous BHPH dealers for deceptive practices, including hidden fees and failure to disclose important terms.
5. Potential for Aggressive Repossession Practices
BHPH dealers often use GPS tracking devices and ignition kill switches to quickly repossess vehicles if payments are missed. Larger dealerships typically work with third-party lenders who follow more standardized and regulated repossession procedures.
Example: Some BHPH dealers have been known to disable cars remotely when payments are just a few days late, leaving customers stranded. This practice is less common with established dealerships and their affiliated lenders.
Conclusion
While buy-here pay-here dealerships may seem like an easy solution for those with credit challenges, the risks often outweigh the benefits. Higher costs, lower quality vehicles, limited selection, fewer consumer protections, and aggressive collection practices make them a risky choice for most buyers.
By choosing a larger, established brand dealership, you’re more likely to find a reliable vehicle at a fair price, with transparent financing terms and better overall customer service. Remember, a car purchase is a significant financial decision – it’s worth taking the time to explore all your options and choose a reputable dealer that has your best interests in mind.
Motor keeper 