Understanding Large Down Payments at Buy Here, Pay Here Dealerships

March 14th, 2016 by

A smiling young woman in a white car is being handed car keys at a Cincinnati buy here pay here dealership.

There are myths floating around about Cincinnati buy here, pay here car dealerships. Some people say they are out to get you, provide exaggerated examples of interest rates paid, or tell fabricated stories about unwarranted car repossessions. None of these are true, of course. Buy here, pay here dealerships aren’t out to get you, they are here to help you. The interest rates are higher than average because they deal with bad credit consumers, and the car repossessions are only reserved for those who don’t make payments. Perhaps one of the biggest misconceptions floating around, is the gigantic down payment they force on you in order to make your car purchase. Just like the interest rate, the number is typically exaggerated.

Exaggerated perhaps, but never forced. Buy here, pay here down payments are, however, higher than average. But, they are intended to benefit you and the BHPH dealership. Overall, a large downpayment works well for both the consumer and the dealer; here’s how.

For The Dealership’s Benefit

First of all, BHPH dealerships typically pay the bad credit consumer’s taxes up front. This means, if you drop a small down payment, the dealership will need to pay the remainder of your taxes. If your taxes end up being around $500, and all you can drop is $200, then they will need to pay $300. Therefore, a higher-than-average down payment is needed in order to cover the cost of taxes.

Secondly, the dealership needs a larger down payment to help protect their financial interests. If you make a large down payment on a car, that means you are a lot less likely to default on it. In turn, it gives the dealers peace of mind when you offer/accept to pay a higher-than-average down payment because it shows you are willing to be an honest patron.

I’m not saying you specifically would default and try to sham a BHPH dealership, but it does happen. People will get a car from these places, and then just disappear with it overnight. Or they’ll crash them, dump them, use them for parts, or any other foolish money-making scheme they can think of.

With a large down payment, the dealer has assurance that you won’t do that. The people looking to scam a dealership wouldn’t go through the effort of putting a larger down payment on a vehicle, only to default on it.

Financially, It Makes Sense For You

This larger down payment also makes sense for you. Financially, you will be far better off in the future. Why? A large down payment shaves months of payments off your car loan. For example, if you get approved for a car that costs $7,000 and you drop $2,000 on it, then you will eliminate a large chunk of the total cost. This means a shorter loan term, smaller monthly payments, and less interest paid.

The benefits don’t stop there, you will also be on the right path to rebuilding your credit. Like I said before, if you drop a large downpayment, you will be less likely to default on a loan. This not only shows financial responsibility, but it also makes payments easier in the future. Those on-time payments are a surefire way to raise your credit score, and get back on track.

It’s for this reason alone that a large down payment is a win-win situation for you and the dealership. Because regardless of what you hear, buy here, pay here dealerships are there to help you. They don’t want to scam you, and at the end of the day, they are the ones taking the risk by financing bad credit consumers.


2021 Update

Rows of cars are shown within a Cincinnati buy here pay here dealership.

While putting down the largest down payment possible makes a lot of financial sense, it is still best for the consumer to target the most reliable vehicles available for a low price so that they get the most out of the transaction. Your large down payment will go even further when used on the right car. Solid, reliable, low-cost transportation is the name of the game. Thankfully, on the whole, used cars are more reliable than ever before. And with so many to choose from, which is right for you? Here are a few of our top picks to look for if you are considering a used car:

Honda Accord 2003 to Present

The Honda Accord has been a beacon of solid transportation for decades now, and the models from the mid-2000s are excellent examples of the breed. They are known for safely and reliably shuttling passengers to work and play without fuss or drama, thanks to thoughtful engineering and surprising efficiency. While the Accord is anything but flamboyant, its staunch reliability and ability to easily last longer than 200,000 miles when well maintained have earned the humble sedan a surprising number of fans.

The Accord is an all-around workhorse of a sedan, capable of moving passengers with some level of comfort and moving a surprising amount of cargo in its spacious trunk. When driven smoothly, this generation of Accord gets surprisingly good gas mileage, often well-over 20 miles per gallon. This is due to the Accord’s excellent engine and aerodynamic design. At the same time, the inline-four engines commonly found in this vehicle are very good, and the V6s complete the package of power, reliability, and efficiency.

Honda Civic 2006 to Present

The Civic began life in the ’70s as a humble and tiny commuter car. Over time the little automobile grew in stature, capability, and renown thanks to a nearly unbroken record of user-friendly reliability. These days, the Civic maintains its iconic status as the ideal metropolitan runabout, with late-model versions dropping in price as new models get introduced.

The Honda Civic is best for those who prefer a smaller vehicle footprint, whether parked or moving. While a compact car like the Civic does take up less space in a parking spot, it also takes less fuel and requires less intensive maintenance than most. The Civic manages to achieve this while still offering significant interior space, belying Honda’s engineering excellence even from years ago.

Toyota Sienna 2007 to Present

Finding a Sienna for under 10,000 dollars with reasonable mileage may be challenging, but if you need a minivan, it will be worth it. Equipped with a powerful engine and overbuilt in Toyota’s normal fashion, these vans are said to last just about forever. During that time, they maintain their impressive power and efficiency all while remaining one of the most reliable modern minivans ever produced.

The Sienna is best for those who need to carry the family around on a daily basis, though it can also be used to get large amounts of cargo to where it’s needed. These vans remain highly sought after, and they normally only start to become more inexpensive when over 200,000 miles. While they can still provide reliable service after this time with a careful eye on maintenance, it is best to look for them just past the 100,000-mile mark for a low price.

Chevrolet Impala 2006 to 2020

A red 2018 Chevy Impala is driving on a road.

Impala is a classic name, revered by an immense breath of people not just in automotive culture, but American and global popular culture in general. For the Impala’s ninth-generation (2006-2016), Chevrolet opted to do without some of the pomp and circumstance in lieu of a more understated look while bringing back some of the internal features from past Impalas that earned it the reverence it now carries.

The main feature that returned to the Impala in the ninth-generation is a bevy of high-output engines, some of which surpass the output of even the massive displacement V8s of the height of the muscle car era. This modern Impala’s engine lineup includes the only front-wheel drive incarnation of the infamous LS series of Small Block Chevy engines.

Most ninth-generation Impalas were equipped with respectably powerful V6 engines that balance reliability and fuel efficiency. The Impala is a large and rather heavy car, but for those who need a full-size sedan on a budget, there are no better options than an American icon.

Mercury Grand Marquis 2003-2011

Based on the Ford Crown Victoria, the Mercury Grand Marquis presents a uniquely American brand of luxury. The Grand Marquis isn’t about high-end technology and isn’t filled with gadgets. The only things residing inside the large bulk of this powerful behemoth are leather and open space. The Grand Marquis represents one of the last and best iterations of the good old American couch on wheels, powered by a torquey V8 and sustained by engaging rear-wheel drive.

The Grand Marquis is immensely comfortable and staggeringly simple, and there are many available for a low price on the used market. The plush Mercury takes reliability to the next level with full-frame construction and solid build quality that was improved upon over decades. Sharing the same platform as the same vehicles favored by police forces all over the North American continent, the Grand Marquis presents a dependable option for those with a budget and a taste for supreme comfort.

Toyota Camry 2007 to Present

Toyota’s reputation for quality vehicles at reasonable prices precedes them, especially with their mainstream automotive juggernaut, the Toyota Camry. When new, this Camry was largely the standard other midsize used cars strove towards, leading the market not just in sales but setting the bar for quality and reliability. This world-class car is now commonly available for cheap, thanks to the hundreds of thousands sold every year in the US.

The Camry is similar to the Honda Accord in how it is best utilized. Simply put, it is an all-rounder that can handle everything day to day life can throw at it, from moderate cargo hauling to filling up the backseat with the family. It differs from the Accord in that it is generally heavier built. The inline-four equipped Camrys tend to be more reliable, though they do lose a noticeable amount of performance compared to the more powerful V6 variants.

Find Your New Used Vehicle at McCluskey Automotive

Bang for buck is paramount when it comes to Buy Here, Pay Here transactions, but if you find the right car, it can definitely be worthwhile for all involved. Vehicles like the Impala, Civic, and Grand Marquis show the depth and breadth of the choices available, even for a small budget. For a solid runabout, the Accord and Camry are prime choices. They can get people and cargo around town just as easily as across the country and can do so while still being easy on the wallet in terms of fuel costs.

The Civic is an awesome choice for a small car and also the most efficient vehicle on this list. While it may be small on the outside, the inside has proven to be more than enough room for just about anyone. The Sienna and Grand Marquis are somewhat specialized, one for carrying significantly more people and things than a normal car, and the other for extreme reliability and plush comfort.

No matter what you need or what you’re looking for, there’s a car that can suit your needs if you visit McCluskey Auto in Cincinnati, OH.