Buy-Here, Pay-Here Dealers Face Stiff Competition From New-Car Dealers' Cheap Credit

Cameron Aubernon
by Cameron Aubernon
buy here pay here dealers face stiff competition from new car dealers cheap credit

Buy-here, pay-here lots, traditionally the place to find a vehicle with little, bad or no credit, are facing some stiff competition as of late from new-car dealers offering cheap financing.

Automotive News reports in a conference call this spring by America’s Car-Mart CEO Hank Henderson, he said new-car dealerships were making finance offers on both low-end new vehicles and high-end used units his group are unable to counter:

Some of the offerings are zero percent down, no payments for 90 days. We’ve even seen no payments for a year — and then those are getting financed at 72 months, sometimes even longer.

Lenders are fueling the demand for cheap credit at new-car dealers, as well, forcing the buy-here, pay-here dealers to turn down business from consumers hoping to find as much with the latter party. That said, the approach said dealers promote — including substantial down payments and shorter terms — claims to be more economically healthy for subprime consumers than the competitive approach that could leave a consumer upside-down in the long run.

Join the conversation
33 of 59 comments
  • Corey Lewis Corey Lewis on Jul 10, 2014

    Of the cars pictured, I think I'd have to go LeSabre. I hated those Taurii, and the Park Avenue is one of the earlier ones I believe, and is not supercharged since it has a hood ornament.

    • See 8 previous
    • Ajla Ajla on Jul 10, 2014

      @28-Cars-Later "yeah but I’ve always believed anything over 4 ltrs ought to be an 8. ;) " I6?

  • SCE to AUX SCE to AUX on Jul 10, 2014

    I don't know where this cheap money is, but I've already refinanced my 2-month old Optima via my local bank because the car dealer's independent banker was a full point higher (2.49% vs 3.49%, for a score of 825). 0% is a gimmick that's financed by the vehicle price. A few years ago, a bankrupt coworker financed a new Jetta for 1.49%, as I recall. I think they viewed him as a good risk, since his debt had been wiped out, yet he had steady income. His bankruptcy was a result of a divorce (wife cleaned him out). The rest of us with intact debt pay more.

    • See 9 previous
    • DenverMike DenverMike on Jul 10, 2014

      @SaulTigh Besides great a great interest rate, what kind of rebates did you get with that? 20 to 25% or up to $12,000 off is becoming the norm.

  • Frantz Frantz on Jul 10, 2014

    Bhph is around because folks don't want the "hassle" or repairing $500 cars. Craigslist is full of bargains that need nothing more than socfets wrenches and a weekend. Some folks also have the misfortune of home owners orgs, local ordinances, and apartment rules putting undue burdens against vehicle repairs which hurt the folks who need the most help.

    • See 5 previous
    • Pragmatist Pragmatist on Jul 10, 2014

      @Mathias Faded paint. Keep your eyes open in gas stations and parking lots for 'for sale' on faded paint cars. You can get some damned good prices on usable wheels.

  • DenverMike DenverMike on Jul 10, 2014

    Victims, I mean BHPH consumers are actually renting the POS, except for when it breaks, the renter gets to fix it. And when the renter has paid 4 to 8X total, what it was worth at the beginning of the contract, and without missing a payment, they're awarded the pink slip. The BHPH "dealer" will step up and fix the POS for the renter or put up the cash, but will add it to the back of the contract, further extending it.

    • See 3 previous
    • DenverMike DenverMike on Jul 10, 2014

      @28-Cars-Later I didn't say the BHPH makes money on repairs. But the renter is out the money anyway, if and when they satisfy the contract and repairs. The BHPH benefits by the thing staying on the road. If the renter doesn't have use of the car or can't make it to their job, guess who doesn't get their weekly rent? I'd say that's the BHPH profiting.