In-house financing is now easily available at “buy here, pay here” dealerships, which cater to customers with poor credit. While this is a viable option if your credit isn’t in excellent shape, there are certain drawbacks to be aware of.
When you sign a contract to buy a car at a typical car dealership, the document is forwarded to an auto lender, who will finance the transaction. However, a buy here, pay here (BHPH) dealership sells and finances the vehicles on its lot. BHPH dealerships are experts at working with customers who have poor credit or no credit at all. As a result, they may be able to give an opportunity that certain borrowers would be unable to obtain elsewhere.
You can’t just return the vehicle to the car lot and walk out the door from a buy here pay here (BHPH) contract if you haven’t finished paying for it. If you do, your credit score will suffer as a result of the voluntary repossession. You are obligated by the conditions contained in a written contract, just as you are with any vehicle loan. Even while you can’t just turn in your car and stop paying for it, you don’t have to keep a car you don’t want if it isn’t paid off – there are choices to explore if you want to get out of a buy here pay here contract.
If you’re serious about selling the car but there’s still a loan debt, you’ll need to first acquire a payment amount from the lienholder. If appropriate, the payment quote should include 10 days of extra interest from the request date, as well as any fines or early payoff penalties. This gives the lender 10 days to obtain the payoff payments.
After you’ve received the quote, you’ll need to have the automobile assessed by at least two dealerships, though the more the better. You may then compare deals to get the best price for you. After you’ve gotten the assessments, you’ll need to figure out if you have any equity.
When your car is worth more than what you owe on the loan, you have equity. Simply deduct the payment amount from the assessed value to determine your equity position. If the number is positive, you have equity; if it is negative, you have negative equity, which means you owe more on your loan than the automobile is worth.
You may pick which method to follow to get rid of your BHPH car once you’ve determined your equity status. The choices vary, but you usually have three to choose from:
- Sell it yourself — You can usually get more money for a car if you sell it yourself rather than via a dealer. If you can sell it for as much as or more than the outstanding loan debt, this is a viable choice with negative equity.
- Return the car to the BHPH lot — You may trade it in at the same lot where you acquired it if you have equity and wish to work with the same dealer again.
- Trade it in to another dealership — If you have equity in your vehicle and no longer wish to engage with a BHPH dealer, you can simply trade it in.