Analyzing a BHPH Expert’s Thoughts on the Industry

March 17th, 2017 by

A close up shows outstretched hands with a car and money above them.

Modern cars, trucks, and SUVs are more expensive than ever, and not many people can afford to buy a reliable vehicle with cash. Unfortunately, banks refuse to provide loans to many drivers with less than perfect credit. That is where a dealership that offers buy here pay here in Columbus, Ohio comes in. Dealers like McCluskey Chevrolet allow buyers to get behind the wheel of the car they deserve, even if their credit history doesn’t meet the bank’s standards.

There is a sustained negative stigma surrounding the buy here pay here industry, but this view is shortsighted. While these dealerships typically get dinged for their high interest rates, they provide a service that no other automotive business does. Without buy here pay here dealers, many drivers would simply be unable to afford a functioning vehicle.

There’s a good number of prospective car buyers who, for various reasons, can’t secure the necessary line of credit to purchase a vehicle. For many of these buyers, it isn’t even through any fault of their own. Students and recent graduates often simply aren’t old enough to have built up the credit history to be considered for a loan, and plenty of adults have had their credit scores damaged by unpredictable life events. Despite having the income to afford a car, traditional lenders refuse to provide them with a loan.

The extreme emphasis placed on credit history leaves these drivers in a difficult predicament because most of these potential buyers need a vehicle to get them to work, the grocery store, and everywhere else they need to go. Thanks to a buy here pay here dealership’s willingness to offer these customers a chance to acquire that necessary line of credit and subsequently purchase that car from the same business, these buyers have an opportunity that they can’t find elsewhere.

The Benefits of Buy Here Pay Here

This sentiment was recently confirmed by the president and founder of the National Alliance of Buy Here Pay Here Dealers, Ken Shilson. Talking to, Shilson provided insight into the business, and he helped explain these dealership’s rightful place in the industry. Rather than organizations that prey on those who have no other options, Shilson discusses how buy here pay here dealerships fill a vital role in the market and provide vehicles to customers that no one else is willing to serve.

We took a look at two of the more notable quotes from his discussion, and we subsequently analyzed the remarks to elaborate on the major points. That way, when you’re ready to seek a dealership that specializes in buy here pay here in Columbus, Ohio, you’ll have a better understanding of what you’re getting into:

“The first thing is America is car dependent. The customers that we serve are typically unbankable in that they can’t obtain a traditional loan to purchase a vehicle they need to get back and forth to work and to live. We fill an important niche in that area.

Beyond that, these people lack financial capacity, so therefore when they have a life event or a major car repair like transmission or engine problems, they don’t have the financial wherewithal to be able to fix it. But the buy-here, pay-here industry solves that because we typically finance those repairs and help them keep that car on the road. Instead of just selling a vehicle like other parts of the industry, we’re selling a transportation solution. We’re getting them a vehicle and we’re also helping them keep it running in a segment of our population that otherwise wouldn’t have transportation. That’s the role that we play.”

It’s worth noting that this is the first point that Shilson brings up in regards to the buy here pay here industry. Outside of a few densely populated cities, it is difficult to survive in America without a car. However, the banks do not recognize that fact and turn away many potential customers when they come looking for a loan. Without buy here pay here dealers, those customers would never be able to afford a car. Regardless of a person’s opinion on the business model as a whole, there’s no denying that it provides an opportunity that other car sellers do not.

A car will often be one of the most expensive single purchases you’ll make during your lifetime, regardless of the vehicle’s quality or mileage – especially as the price of cars continues to rise. Of course, some people have no means to fund this hefty transaction, and when the banks refuse to provide them with a loan, they’re stuck in a vicious cycle where they’re unable to acquire the necessary transportation to get to their work… which, “ironically,” is the way they can make money to purchase said car. Fortunately, that is where buy here pay here dealers step in and lend a hand.

It’s important to remember that nearly all car buyers need some type of loan when they’re purchasing a vehicle. In fact, car manufacturers make a substantial amount of their profit off the loans they offer. However, while the person may have the necessary money to purchase the car, they may have difficulties acquiring the necessary line of credit. Fortunately, buy here pay here services also accommodate those who are struggling with their credit scores, allowing everyone to have access to the financing they need.

A salesperson is shown holding a car key and smiling at a dealership that offers buy here-pay here in Columbus, Ohio.

The Cost of Buy Here Pay Here

Thanks to their willingness to provide finance for those seeking a used car, these buy here pay here businesses are essentially providing a service that isn’t available elsewhere. However, it is, of course, unrealistic to expect buy here pay here dealers to offer the same generous financing terms that are available elsewhere. Traditional financing generally offers much lower interest rates, but that is because they are extremely picky about who they will finance. Buy here pay here dealerships will finance everyone, and unfortunately, not every customer will live up to their side of the agreement.

“I think not all but some of the consumer advocates look at the high cost of financing for people who have had credit problems and they don’t understand why that is. You have to look a little deeper and say when you’ve had a past credit problem, nobody wants to extend you credit and you have limited options, you should have to pay a premium. The risk that somebody is taking in extending that financing to people who have had past credit problems is significant. Typically when people call me and say how can you justify charging someone 20 or 21 percent interest? Before I answer I turn it around say, “OK, if someone came to you and wanted to borrow $10,000 largely on an unsecured basis and they had past repossessions and maybe a bankruptcy, what would you charge them to make that loan?” They said, “It’s easy. We wouldn’t make that loan at all.” I said, “That’s exactly the point.” When you’re the one who is willing to take all of the risk, you deserve a premium.”

This is the major defense for the high interest rates that generally accompany buy here-pay here dealerships. These businesses aren’t catering to “regular” customers. Instead, they’re helping those who are struggling with their credit or finances. The majority of buy here pay here customers are simply unlucky when it comes to their less than perfect credit, but some customers will take out loans without having any ability to pay them back. It is those people that force buy here pay here dealerships to charge high interest rates to cover the possibility that some of the money won’t be repaid.

Understandably, the dealership is taking a significant risk by providing a line of credit to these customers. For whatever reasons, these people find themselves unable to secure a line of credit elsewhere, meaning they’re essentially incapable of purchasing a car. There’s not necessarily any proof that these borrowers will change their ways, so these buy here pay here businesses have to charge a premium interest to hedge their bets. Significantly lower interest rates would surely put these dealerships out of business.

Should You Use Buy Here Pay Here?

Buy here pay here dealerships often get a bad rap, but the only real difference between them and a new car dealership is the high interest rates. Despite the different name, buy here pay here follows pretty much the same model as the new car world, except you are financing through the dealership itself rather than through the manufacturer. If you are not finding a traditional bank that is willing to provide you with financing, then you have no reason not to consider visiting your local Columbus pay here pay here dealer.

You shouldn’t assume that these businesses will be providing lesser service or inadequate vehicles. While buy here pay here dealerships do tend to stock older used vehicles; those are what their customers tend to be looking for. Any reputable dealership like McCluskey Automotive will still put the same effort into their buy here pay here sales as any other customer. They’re also trustworthy and transparent about any fees or vehicle issues. Once you understand that many of these businesses are operating under this mindset, you shouldn’t have any apprehension about pursuing a used car from these businesses.

In 2021, the economy and the car market are undergoing unprecedented shifts, and the number of customers who cannot find traditional financing on expensive vehicles is growing. If you are having trouble getting a loan on a new car, consider turning to a buy here pay here dealership. While you may have heard stereotypes about these services, we encourage you to visit our location and discover the reality. If you are a savvy shopper, a buy here pay here dealership like McCluskey Automotive can get you back out on the road when no one else will give you the time of day.

As Shilson said, America is car dependent, and buy here pay here dealerships recognize the fact that everyone needs a car they can count on. When you are just trying to get to work or find a job, the last thing you need is a bank telling you that you don’t deserve financing for a car. If you have been getting loan rejections from the banks, then it is time to try something new and visit a reputable buy here pay here location. There is no better way to get off to a new start than by getting a new car to help you along your journey.

A smiling person is shown driving a car while looking to the side.

The Buy Here Pay Here Opportunity

All of a buy here pay here dealership’s methods are completely rooted in logic. They cater to an underserved market, but the higher risks they take on require them to charge higher interest so as not to go out of business. It is easy to point to the lower interest rates offered by traditional financing, but if a bank refuses to give you a loan because your credit history isn’t perfect, those lower rates are entirely academic. Once you understand these principles, any stigma that may surround buy here pay here locations can easily be ignored. After all, these car sellers are taking a big risk by accommodating their demographic of customers, so they need to hedge their bets.

If you’re seeking a trustworthy and reliable buy here pay here dealership in Columbus, Ohio, you won’t need to look any further than McCluskey Automotive. Our helpful sales team will guide you through the process of purchasing a car and acquiring the necessary line of credit, even if you are a first-time shopper or unfamiliar with the buy here pay here process. Trying to find financing shouldn’t be a frustrating experience that leaves you wondering if you will ever be able to afford a car. By taking advantage of the opportunity offered by a buy here pay here dealership, you can climb into the driver’s seat and start building your credit for your next car purchase.