Buy Here Pay Here versus Lease Here Pay Here: Which is Better?

November 30th, 2015 by

Times are tough. Maybe you have bad credit – and, to fix it, you need some money. So you start looking for a job – but first you need a car. And you can’t get a car without good credit.

It’s a vicious cycle – so what can a desperate car buyer do? It might be time to consider looking at a buy here, pay here dealership. There, you may have two options – buy here pay here, or lease here pay here. But what’s the difference?

Are you in the market for a used car, but can’t get one because of your bad credit? Take a look at your local buy here pay here Ohio dealer and see what’s in stock – they may have a deal that’s perfect for you.

Whatever your choice, there are a few things about buy here pay here that any prospective consumer should know before getting into any agreement.

First off, it’s important to keep in mind that the vehicles typically found on a buy here pay here lot are used, often heavily. These are not your newest models, but often range from “slightly used” to “beater” – with prices that reflect their designation. In most cases, one will have to pay more for a car that has been used less, and will receive a break on more heavily used vehicles.

It’s critical to remember that these vehicles are specifically marketed to the desperate among us – those who need a car so badly they forgo shopping around and doing research in lieu of getting a quick set of wheels on bad credit. Many of these customers end up paying exorbitant interest rates – well above market average from a standard dealer – in exchange for lower money down up front. Because this equates to more money in the long run, about 25% of buy here pay here customers end up having their vehicles repossessed by the same dealer, who will often turn it around for resale at a profit, according to reporting from the L.A. Times.

That being said, it’s important to consider the benefits of “lease here, pay here” versus “buy here, pay here”. While many consumer might be drawn to the prospect of leasing a used car, this can actually end up costing the consumer much more in the long run. For instance, rather than the initial down payment going toward the value of the car, as it would if the consumer were purchasing the vehicle, the down payment on a lease simply goes into the dealer’s pocket.

And, if the consumer defaults on his or her loan, repossession for resale is only that much easier, since state rules limiting interest rates and protecting assets in a bankruptcy do not exist with this kind of agreement. Since the title never changes hands, the dealer often receives a tax advantage on federal and state income taxes and sales tax, according to NPR. Those who opt for lease here pay here are also rarely guaranteed service contracts from the dealer, and must either pay for repairs themselves or only at the original dealer.

There are plenty of reasons to be leery of a lease here pay here contract. For that reason, it’s a safer bet to go with a buy here pay here contract. If you are in need of a car through a buy here pay here Ohio dealer, head over to McClusky Automotive and see what’s in stock.