Buy Here, Pay Here: Bottom-feeding for used car buyers in a recession

[mahatmakanejeeves]

I wasn't aware of these, but they have been mentioned at DU before.

Buy Here, Pay Here: Bottom-feeding for used car buyers in a recession

The timing is appropriate because if ever a demand existed for Buy Here, Pay Here, or BHPH, it is now. With unemployment high and millions of homes being foreclosed, many people who need transportation find they can't buy any because they have neither cash nor credit. BHPH serves buyers who have few alternatives and are willing to endure steep interest charges -- along with onerous collection tactics if they fall behind.

BHPH has more to do with lending and collecting money than it does with the traditional car business. The vehicle is merely a commodity, the asset used to secure the loan. One writer described a BHPH outlet as "a bank masquerading as a used car lot."

[Ghost in the Machine]

1. You weren't aware of buy here, pay here car lots before?

I used one 30 years ago... and they actually help people with bad credit. Sure, there are some shady dealers out there, but the good ones far outnumber the bad....

[mahatmakanejeeves]

3. Not as a chain.

There are quite a few independent used car dealers where I live, but I hadn't thought of them as part of a nationwide chain. I guess Carmax would fall into this category, wouldn't it? I guess, come to think of it, I was aware of them. They just seemed to be below my radar.

Thanks.

[petronius]

2. In a way, it would be nice if regular car dealers did the credit assessment first,

rather than up-selling people into loans they really can't handle. Although I suppose responsible buyers do that themselves, and responsible dealers avoid pushing people into risk.

I can see the real potential for abuse here, but done fairly it could be a boon to people who otherwise couldn't get a vehicle...