Buying from a "Buy Here Pay Here" Car Lot

By Zac Estrada
Last Updated 05/13/2015

While banks have been more generous lately since the depths of recession, buying a car without good credit can still be difficult. People of all ages can find traditional outlets unwilling to give them financing, which is why so-called Buy-Here-Pay-Here used car lots are inviting.

But that initially inviting promise to finance anyone who walks in comes at another price of unsavory business practices and less-than-stellar cars that aren’t the best value in the long run. Buy-here-pay-here lots are hobbled with a reputation of getting consumers into trouble and luring in buyers who cannot afford the car they’re leaving with.

Financing Concerns

Buy-here-pay-here lots have a history according to an extensive 2011 report done by the Los Angeles Times. If you have unfavorable credit, you’re a prime target for some insane terms, such as long loans (10 years) and sky-high interest rates (30 percent, in some cases). Any car loan that lasts more than 60 months is a risk, this isn’t a house, after all.

And if you can’t meet the payments, you’re going to get repossessed. That’ll be even more detrimental to your credit, and lenders at these lots are unwilling to negotiate terms. They’re in the business of selling cars and will take your repo and have it sold to someone else.

Lenders in these situations don’t have a reason to keep you in your car or make concessions to accommodate your ability to make payments. In fact, many dealers know their customers aren’t the kind of people who are prepared for unexpected circumstances, and that many have little or no cushion of cash. And if you fall behind on your payments, they’ll take your car to someone else who may also be unable to meet the terms.

Overpriced Cars

Another common trait at these lots is that cars are priced higher than their actual worth. Buyers have less room in terms of haggling or shopping around for the best price. And these might not be the highest-quality used cars in the first place. Vehicle History Reports aren’t necessarily made available, meaning you could be buying something with a checkered past.


There are few, actually. At least in California, these lots are required to show a fair market value for the car they’re selling, back the vehicle with a 30-day warranty and provide options other than their own for lending. However, most states have made little progress in setting up protections against deceptive practices at these car dealerships.

Should You Buy Here and Pay Here?

The short answer is “Don’t.” Buy-here-pay-here lots are much riskier for buyers and certainly not a good value in the long-term. While there are some that don’t prey nearly as aggressively on people with poor credit, you’re just not as well protected. Cars may not be up to the quality you’d get from a regular dealer, the prices may not be competitive and you could be paying for the car for much longer than you should.

That said, there are plenty of ways new car dealers get consumers to pay much more for a car than necessary. So it’s of great importance that you walk onto a car lot with an excellent understanding of your finances and the value of the car you’re looking to buy. Get various quotes from various lenders before signing the paperwork on a car. Doing your research before being talked up by a smooth salesperson is key.

The safest way to make sure you’re not getting ripped off when borrowing money on a new car is to establish solid credit. Take six months to a year to build a good record of paying bills on time on paying off credit cards. Take steps to better manage debts and outstanding loans before applying for financing on a car.

It’ll pay off in the long run.