Why You Should Consider a BHPH Dealership for Your Next Car Purchase

September 30th, 2016 by

Black and silver cars in a line, parked diagonally

The Buy Here, Pay Here industry is doing its best to earn customer’s trust. Over the years, these dealerships have unfairly gotten a bad rap, particularly for their high interest rates or inconsistent car pricing.

However, when it comes down to it, these businesses are really taking a risk by extending a line of credit to those in poor financial situations. You can’t necessarily blame a dealership for offering high interest rates. It not only allows them the chance to make a profit, but it also allows them to partly protect their asset. 

Of course, we don’t need to defend these Buy Here, Pay Here dealerships. Rather, the National Alliance of Buy Here, Pay Here Dealers was created to help remedy any issues or concerns prospective customers may have about approaching these businesses for their next car purchases. President and Founder of the group, Ken Shilson, recently sat down with AutoRemarketing.com to discuss the ins and outs of the industry, and his answers helped give us a fresh perspective on these types of dealerships.

Check out what Shilson had to say, and it may influence your decisions to visit a Buy Here, Pay Here dealership in Columbus

What Are the Best Attributes of a BHPH Dealership?

“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.

“We also grant people additional credit when others are saying no.”

We briefly touched on this during the intro, but Shilson does a nice job of articulating the point: with BHPH dealerships, some drivers may have no other way to acquire a vehicle. If you live in Ohio and have no realistic way of getting to work via a friend or public transportation, a Buy Here, Pay Here dealership in Columbus may be your best choice.

Why Are BHPH Dealerships Often Criticized?

“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 an important factor to consider when you’re shopping for a vehicle at a BHPH dealership. The interest rates are the sole way these businesses can hold their customers accountable. Furthermore, the prices are always transparent, so drivers should understand what they’re getting into when they’re determining the vehicle’s loan terms. If a customer is unable to make a monthly payment, they probably shouldn’t be pursuing that particular vehicle. If you’re shopping at a Buy Here, Pay Here dealership in Columbus, make sure you understand your monthly financial situation before making any deals.

Why Would a New Car Dealership Offer BHPH Programs?

“It can provide an important complement to franchised operations in the sense that franchised dealers typically get a lot of great inventory through trade-ins. But that inventory doesn’t necessarily fit what they sell on their used-car lot either by virtue that it has more miles on it or it is an older vehicle. Maybe it has some characteristics that don’t lend itself to put out in the used-car operation that they have. Rather than wholesaling that vehicle to somebody who is going to take it and turn it into a buy-here, pay-here vehicle and create more competition, they can set up a segment of their business where they can realize a nice profit off that vehicle when they resell it rather than wholesaling it at virtually no profit or even at a loss in some cases. It’s a great way for them to mine more profit out of something that’s inherent in their business, the trade-in.”

We’re not going to lie and say that some Buy Here-Pay Here dealerships aren’t seedy. However, there’s no denying the success of the industry, and a dealership would be smart to offer some kind of financing program.

In other words, it’d be silly to discount a new car dealership just because they offer a BHPH program. For example, our favorite Buy Here, Pay Here dealership in Columbus, McCluskey Chevrolet, is one of the most reputable dealerships in the entire region.

 If you need any more convincing when it comes to shopping at a Buy Here, Pay Here dealership in Columbus, head down to McCluskey to see all of their offerings. The helpful and knowledgable finance team will help guide you through the car-buying process, and you could be driving off the lot in a vehicle in no time!

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