Advantages and Disadvantages of a Buy Here / Pay Here Program

You may have seen advertisements for used car dealerships with claims like "We Finance Everyone," or "Bad Credit, No Problem."

These dealerships are probably offering a "Buy Here, Pay Here" program, and there are many misconceptions and myths out there about these kinds of deals.

It's true that Buy Here, Pay Here programs aren't for everyone. Let's take a look at some of the pros and cons, so you can decide what financing option is right for you.

What Is A Buy Here / Pay Here Program?

A Buy Here, Pay Here program is when a dealer offers financing in addition to selling you a used car. This means you are borrowing directly from the dealership, although the loan may be underwritten by a bank or financial institution. Simply put, the dealership is lending you their money-although typically at a higher interest rate than you might get elsewhere.

Buy Here, Pay Here programs are usually offered to people with poor credit who would otherwise have trouble getting a car loan. The higher interest rates are designed to offset the risks of approving a loan when the chances of repossession and default are greater.


Obviously, you want to get a loan with the lowest interest rate possible, but if you have a low credit score then your options are probably pretty limited. There's a myth that all Buy Here, Pay Here loans charge in excess of 30% interest, but that is rarely the case. Actual interest rates for dealership-financed loans are much more in line with the deep sub-prime market (credit scores below 549), with interest rates around 17%.

If you've exhausted all your loan options, then a Buy Here, Pay Here program could be an affordable choice-just make sure you only get one from a dealership you trust, and that you fully understand all the terms and conditions of the contract.


Some Buy Here, Pay Here dealerships have a reputation of taking advantage of people with bad credit. The fact is, they are taking on loans that other financial institutions are unwilling to offer, and with that extra risk comes a higher interest rate and other stipulations.

For example, the dealer might attach a tracking device to the vehicle, in case they need to repossess it (of course, when you default on any car loan, you risk repossession). Some dealerships require that all loan payments for Buy Here, Pay Here programs be made in person with cash or money order.

Any reputable dealership will be entirely upfront with all aspects of their Buy Here, Pay Here program. As long as you understand all the conditions of the loan, then there shouldn't be any surprises further down the road.

Finding a Used Car Dealership You Can Trust

You should only consider a Buy Here, Pay Here loan from a dealership you trust. If at any time you feel uncomfortable while discussing these types of loans with a dealer, don't be afraid to walk away.

It's better to get a Buy Here, Pay Here loan from a dealership that also offers a variety of lending options, including financing with several different banks and financial institutions. They will be able to help you find the financing option that is best for you.

Used Cars and Trucks for Sale in Utah

Check out our online listings for used cars and used trucks for sale in Utah. Ed Kenley Ford serves the Layton, Ogden, and Salt Lake City area; to learn more about our many financing options, give us a call at 888-480-2945.