In Las Vegas buy here pay here is big, should it be?
You’ve heard the term as either buy here pay here, bhph, in house financing etc. In Las Vegas Buy Here Pay Here signs are everywhere. But what is the real difference between in house financing and traditional loans? Which one is best for you?
WHAT IS BUY-HERE-PAY-HERE FINANCING?
You may have heard of bhph or seen it on signs around Las Vegas, but what is it? Basically, in house financing is when the seller of the product (the car dealer in this case), does the financing themselves. No bank is involved but sometimes a 3rd party can be used to manage the loan.
This means the dealer can make the final say on who can finance without the input of the bank.
WHAT IS TRADITIONAL FINANCING?
Traditional financing is what 99% of people actually use to finance their auto loan. This is when the dealer submits your loan to one or more lenders that buy the loan from the dealer.
This means the 3rd party lender, not the dealer, has the final say on the loan.
DIFFERENCES IN TRADITIONAL FINANCING AND BHPH
There are a few differences. Usually Bhph is a more aggressive loan. Because they have to accept 100% of the risk the dealers will reduce this risk with certain terms. Usually these payments are made around your paydays, bi weekly usually. The price is almost always higher as well as the interest rate. Some BPHP dealers report that there is almost a 50% repossession rate, so that means the profit has to be very high to make sense.
Traditional financing usually allows much lower down payments and interest rates. In these cases multiple banks (even with very bad credit) are competing for the loan. This means better terms for you, the consumer. Also, the loans are much “cleaner”. Meaning certain vehicles, like lemon law, salvage title etc, are not allowed with almost any lender. A big difference is the cars as well, usually with traditional financing you get a much nicer, newer car.
Buy-here, pay-here financing: What you need to know – Credit Karma
WHICH ONE IS BEST FOR SOMEONE WITH TERRIBLE CREDIT?
Contrary to popular belief, you’re almost always better going for a traditional loan. They are better for you in almost every measurable way.
The combination of better rates, lower price, and a faier deal means a customer should always try and get a loan through traditional means first if possible – Tina, owner Queen Motorcars
At Queen Motorcars we do about 95% traditional financing and about 5% buy here pay here, or in-house financing. In Las Vegas Buy Here Pay Here advertisements are everywhere, but in reality, very few dealers do much of it.
With out huge list of lenders, we have no issues getting almost everyone a much better loan through traditional means.
The 5% of loans we do as buy-here-pay-here are almost always flipped into traditional loans at some point in the future. There area always exceptions to lenders more rigid guidelines, and short term bhph is a nice solution when it makes sense for the customer and the dealership.
So if you’re in the market for a car loan, do your homework. Always look at the reviews of the dealerships you’re looking at. Make sure that most customers are having positive experiences with getting financing with credit issues.
Even if you’re turned down at one dealership, try another. At Queen Motorcars, in Las Vegas, on average, our customers have been turned down by 3-4 dealers before we get them a vehicle, so don’t give up hope!