Watch Out For Buy Here, Pay Here

 Don't sign for those keys just yet!

For a while there, it seemed like everything was losing its value. Electronics. Food. Clothing. The fledgling economy also caused credit scores to drop as quickly as some home values. 

Fortunately, we've noticed that our economy is bouncing back.  Rebuilding credit can be a much longer road back.  If you, or someone you know, has had trouble getting approved for an auto loan, there is something to be cautiously aware of.... 

"Buy Here, Pay Here" lots can be great.  After all, we all need transportation.  The fact that most, if not all, BHPH lots offer their own financing, means that they can make buying a car much easier than dealers that don't offer their own brand of in-house financing.  If you've had a messy divorce, or some sort of financial setback, a car dealer that boasts "We Finance" will probably gain your attention.  Generally, you'll answer a few questions about your job and where you live. Then you'll be shown the vehicles that qualify for your income level and credit tier. Quick and easy, right?!

Do your research before you sign.

The idea of smooth sailing offered by many "Buy Here, Pay Here" lots can be more like an anchor for others.  BHPH lots don't operate under the same rules and regulations as other dealers.  Since these dealers offer their own financing as opposed to the government-regulated kind from other lenders, there's little to no regulation regarding the selling price of the car or the interest rate they can charge. 

What you don't know is that you're probably doing more damage to your credit than good.  Many BHPH lots don't report to the credit agencies: TransUnion, Experian or Equifax, which means that your good payment history isn't doing anything to improve your credit rating.

Why would they do this?  Because if your credit is what brought you to them, keeping your credit down ensures that you'll be coming back to them when you're ready for some diffierent wheels. Again, not all BHPH lots will do this.  Here are some tips for buying from a Buy Here, Pay Here:

• Don't be late on your payments! Many of these lots will repossess the vehicle and make you restart your contract
• Make sure that credit bureau reporting is documented.  There's no sense in paying too much for a car and too much interest if there is no light at the end of the tunnel.
• Check the vehicle history. Either a Carfax or AutoCheck to make sure that you're not buying a lemon.
• Clarify any warranty coverage. Consider potential repair costs in relation to your scheduled payments.