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A buy here pay here automobile sales lot is operated by a self-financing automobile dealer. Catering to buyers who may not be able to secure bank financing for one reason or another, the buy here pay here holds the title until the vehicle is paid off. Some of the cons to buying a vehicle at a buy here pay here dealership are the typically higher down payment required, as well as high weekly payments and inflated interest rates. Many times, the vehicles on this type of lot are priced higher than a similarly equipped vehicle on a traditional lot.
For the would-be buyer who cannot obtain typical financing for a vehicle, the buy here pay here dealership is often the only option to purchase a vehicle that is selling for more money than the buyer has at his or her disposal. The buyer rarely has to undergo a lengthy application for the vehicle of his or her choice, and often only completes a simple credit application listing address, employer and other family members' pertinent info is all that is required — along with a down payment — to take a vehicle home. The majority of vehicles available on the self-financing-type of lot are sold on an as-is basis, meaning that the vehicles have no warranty whatsoever and all repairs needed are to be performed by the buyer at his or her own expense.
As with bank or manufacturer financing, the buyer of a buy here pay here vehicle is required to maintain full coverage insurance on the vehicle until such time that the vehicle is completely paid for. This is to guarantee the vehicle will be paid for in the case of an accident or other such occurrence that leaves the vehicle destroyed. A vehicle deemed totaled by the insurance company is a vehicle that will require more money to repair than the vehicle is worth on the open market. In this case, the insurance company will more or less buy the vehicle from the owner for the fair market value of the vehicle prior to the accident. There is no guarantee that the vehicle will be paid off by the insurance payout.
In some cases, the buy here pay here dealership will receive the entire insurance check towards the totaled vehicle and will expect the remainder to be paid off by the buyer. This happens because the price of the vehicle is typically higher than fair market value at the time of purchase. Often, the lot will add the remainder onto the price of another vehicle on the lot and sell that vehicle to the buyer on payments to satisfy both vehicles. The typical weekly or bi-weekly payments made to a buy here pay here lot are often required to be made in person. This is so the dealership can keep close tabs on the vehicle if a customer stops paying on time.
I've seen a lot of these dealers taking advantage of the poor and not only to make money, but to also get their vehicles back after they have sold them at most buy here, pay here dealers.