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Jul 07, 2004 -- Avoid buy here, pay here dealerships

Did you know that most dealerships will sell you a used car for twice as much as the car is worth? If the car is worth, $5,000, they’re likely to charge you $10,000. If you finance the car at the dealership on top of that, you could be paying as much as 26 percent each year in interest. Does that sound like a deal to you? Probably not. But almost one in four used cars is now being sold that way in the United States. Clark was stunned when he read this in the Dallas Morning News. So, we are basically setting ourselves up to be ripped off. These dealerships try to sell you a car on the spot with ads that say, “No credit, or bad credit, no problem!” It’s known as “Buy here, Pay here,” and the dealerships are making a fortune off of your desire for convenience. There are now 19,000 dealers who sell “buy here pay here” cars. If your credit is in a rough spot, you need to buy a car for cash. Have the car checked out by an independent mechanic first to make sure it works. But you will be much better off. You never want to buy a car where everything is taken care of in one place.

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What others are saying

  • BHPH have their place
    How can you rebuild your credit if no one will give you a chance. If the "Buy here, pay here" place reports to the Credit bureau, that will allow you to rebuild credit. Paying cash will never do that for you. Of course they charge high rates and high prices. When they finance a person who can't get financed elsewhere, they are taking a HUGE chance themselves. BHPH lots have to write off tons of bucks every month on bad loans. So some of the good ones have to pay for the bad loans. That's the way it is in sub prime lending. Cars are no different than houses or anything else. A reputable BHPH has the cars saftey inspected and have a decent warranty on the powertrain and will take care of the customer sometimes even if the warranty is over with. It protects their collateral doing that. Try to get a regular dealership to do that! They have already gotten all of their money up front and have no incentive to help you after the warranty is gone. Clark, this article is only showing one small facet of the process.
  • buy here, pay here
    I totally agree with Clark Howard. I purchased a used Honda from a pay here, pay here dealership and got robbed of my money! The car was only worth $1,200 according to kbb and I paid a whooping $5,000 (and that doesn't include my down payment). On top of that I found out a year later after learning about carfax that the car had a salvage title and the odometer had been rolled back. PLEASE do your homework when purchasing ANY vehicle, it can save you from a situation like mine.
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